The Black Money Law in India, officially known as the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, was enacted to combat the issue of unaccounted wealth and black money held by Indian citizens abroad.

Key features of the law include:

1. Tax on Undisclosed Assets: It imposes a tax of 30% on undisclosed foreign income and assets, along with a penalty of 100% of the tax due.

2. Disclosure Requirements: Individuals are required to declare their foreign income and assets, providing an opportunity for voluntary disclosure before penalties are imposed.

3. Strict Penalties: The law establishes stringent penalties for non-compliance, including potential imprisonment for offenders.

4. Investigation Powers: It grants tax authorities the power to investigate and take action against individuals suspected of holding undisclosed foreign assets.

The law aims to deter tax evasion, promote transparency, and enhance the government’s ability to track and recover unaccounted wealth.

Undisclosed foreign assets refer to financial assets, properties, or investments held by individuals or entities outside of India that have not been reported to tax authorities. These assets can include:

1. Bank Accounts: Funds in foreign bank accounts that have not been declared.
2. Real Estate: Properties owned abroad that are not disclosed in tax filings.
3. Investments: Shares, bonds, or other financial instruments held in foreign markets.
4. Trusts and Partnerships: Interests in foreign trusts or business entities.

Under laws such as the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, individuals are required to declare these assets and pay tax on them. Failure to do so can result in heavy penalties, including substantial fines and imprisonment, aimed at curbing tax evasion and promoting transparency.

Penalties and prosecution for undisclosed foreign assets in India are outlined under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Key aspects include:

1. Tax Liability: Undisclosed foreign assets are subject to a tax rate of 30% on the value of the assets.

2. Penalties: In addition to the tax, a penalty of 100% of the tax due can be imposed, significantly increasing the financial burden on the taxpayer.

3. Prosecution: Willful failure to disclose foreign assets can lead to criminal prosecution, with potential imprisonment ranging from 3 to 10 years, depending on the severity of the offense.

4. Investigation Powers: Tax authorities have the authority to investigate and take action against individuals suspected of holding undisclosed assets, including conducting searches and seizing assets.

These measures are designed to deter tax evasion, promote compliance, and enhance the government’s ability to recover unaccounted wealth.

Voluntary disclosure of foreign assets refers to the process by which individuals or entities proactively report previously undisclosed foreign income and assets to tax authorities. In India, this is facilitated under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, which allows taxpayers to declare their foreign assets before enforcement actions are taken.

Key aspects include:

1. Opportunity for Compliance: Taxpayers can voluntarily disclose their foreign assets, thereby avoiding severe penalties and prosecution associated with non-disclosure.

2. Tax and Penalty Benefits: Upon voluntary disclosure, taxpayers are required to pay a 30% tax on the value of undisclosed assets, but the penalties may be reduced or waived, depending on the circumstances.

3. Time-Limited Window: The government may offer specific time periods during which voluntary disclosures can be made, providing a clear framework for compliance.

4. Enhanced Transparency: This initiative aims to encourage compliance and bring unaccounted wealth into the tax system, promoting greater transparency and accountability.

Voluntary disclosure is seen as a proactive measure for taxpayers to regularize their affairs and mitigate the risks associated with undisclosed assets.