Wednesday, March 2, 2011

Govt unveils “tool box” to counter black money

New Delhi: Unveiling the "toolbox" of counter measures to check black money, the government Tuesday has said the payments made to entities located in countries and tax jurisdictions which refuse to share tax-related information will attract a TDS(Tax Deduction at Source) of 30 percent or more.
"...any payment made to a person located in the notified jurisdictional area shall be liable to deduction of tax at the higher of the rates specified...or at a rate of 30 percent", says the 'toolbox' of counter measures which will be incorporated in the Income Tax Act.

The G20 leaders at Seoul summit last year had asked each country to develop a toolbox of counter measures against non-cooperative jurisdictions.

Under proposed provisions, the government will notify the countries and jurisdictions which are reluctant to share banking information and other details with it.

The provisions, proposed by Finance Minister Pranab Mukherjee in the Budget for 2011-12, are in line with the commitments made by India at G-20 meetings that it would come out with its own 'toolbox' of countermeasures to deal with tax havens.

These measures are aimed at discouraging transactions by "a resident assessee with persons located in any country or jurisdiction which does not effectively exchange information with India," said the Memorandum explaining the provisions of the Finance Bill 2011.

It further said that the persons dealing with entities in notified jurisdictions will not be entitled for any tax benefit unless they authorise the Central Board of Direct Taxes (CBDT) to seek financial information from the overseas bodies.

Moreover, the Memorandum added, the funds received from overseas entities would be treated as his income for purpose of taxation unless he is "satisfactorily" able to show the source of money.

Also such dealings will be treated as international transactions and all parties in the deal will be scrutinised under the transfer pricing regulations.

The amendments, according to the Memorandum, will come into effect from June 1, 2011.

These provisions, Mukherjee had said in his Budget speech, would "strengthen our system of collection of information from foreign tax jurisdictions...(and) discourage transactions with entities located in non-cooperative jurisdictions as may be notified by the government".

No comments:

Post a Comment

Subscribe to Extraminds feeds

NDTV News - Top Stories

Latest Happenings all around the world Headline Animator