Union Budget 2012 makes it mandatory for taxpayer to declare foreign bank accounts & other offshore assets

MUMBAI: Making it mandatory for taxpayer to declare their foreign bank accounts and other offshore assets, could well be a precursor to an amnesty programme, possiibly something in line with the Voluntary Disclosure of Income Scheme '97. A similar law is already in existence in the US where the law requires citizens to disclose their foreign accounts.

The moment taxpayers diclose their overseas assets, they will be under compulsion to pay tax on these assets. This could pave the way for a negotiated settlement, which may or may not be termed amnesty.

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The US had offered immunity from prosecution to those who have disclosed such income within the period specified under the law.

A similar law was first proposed in India in a document submitted to the Central Board of Direct Taxes (CBDT) by K V M Pai, a retired chief Commission of In come-tax. Later this proposal became a part of the Direct tax Code (DTC) which is scheduled to be operational from April 1, 2012. DTC, however, is not expected to become law as scheduled and hence the government brought in it under the Income-tax Act. A clearer picture may emerge once the government tables the white paper on black money.

A proposal for amnesty will have to face a few hurdles. First, the Supreme Court's observation that VDIS 97 would be the last of such amnesties; second, there will be opposition from political parties who would interpret such a proposal as a ploy to protect the corrupt and dishonest.