3. Charge of tax.—(1) There shall be charged on every assessee for every assessment year
commencing on or after the 1st day of April, 2016, subject to the provisions of this Act, a tax in respect of
his total undisclosed foreign income and asset of the previous year at the rate of thirty per cent. of such
undisclosed income and asset:
Provided that an undisclosed asset located outside India shall be charged to tax on its value in the
previous year in which such asset comes to the notice of the Assessing Officer.
(2) For the purposes of this section, ―value of an undisclosed asset‖ means the fair market value of an
asset (including financial interest in any entity) determined in such manner as may be prescribed.
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4. Scope of total undisclosed foreign income and asset.—(1) Subject to the provisions of this Act,
the total undisclosed foreign income and asset of any previous year of an assessee shall be,—
(a) the income from a source located outside India, which has not been disclosed in the return of
income furnished within the time specified in Explanation 2 to sub-section (1) or under
sub-section (4) or sub-section (5) of section 139 of the Income-tax Act;
(b) the income, from a source located outside India, in respect of which a return is required to be
furnished under section 139 of the Income-tax Act but no return of income has been furnished within
the time specified in Explanation 2 to sub-section (1) or under sub-section (4) or sub-section (5) of
section 139 of the said Act; and
(c) the value of an undisclosed asset located outside India.
(2) Notwithstanding anything contained in sub-section (1), any variation made in the income from a
source outside India in the assessment or reassessment of the total income of any previous year, of the
assessee under the Income-tax Act in accordance with the provisions of section 29 to section 43C or
section 57 to section 59 or section 92C of the said Act, shall not be included in the total undisclosed
foreign income.
(3) The income included in the total undisclosed foreign income and asset under this Act shall not
form part of the total income under the Income-tax Act.
5. Computation of total undisclosed foreign income and asset.—(1) In computing the total
undisclosed foreign income and asset of any previous year of an assessee,—
(i) no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed
to the assessee, whether or not it is allowable in accordance with the provisions of the Income-tax
Act;
(ii) any income,—
(a) which has been assessed to tax for any assessment year under the Income-tax Act prior to
the assessment year to which this Act applies; or
(b) which is assessable or has been assessed to tax for any assessment year under this Act,
shall be reduced from the value of the undisclosed asset located outside India, if, the assessee furnishes
evidence to the satisfaction of the Assessing Officer that the asset has been acquired from the income
which has been assessed or is assessable, as the case may be, to tax.
(2) The amount of deduction referred to in clause (ii) of sub-section (1) in case of an immovable
property shall be the amount which bears to the value of the asset as on the first day of the financial year
in which it comes to the notice of the Assessing Officer, the same proportion as the assessable or assessed
foreign income bears to the total cost of the asset.
Illustration
A house property located outside India was acquired by an assessee in the previous year 2009-10 for
fifty lakh rupees. Out of the investment of fifty lakh rupees, twenty lakh rupees was assessed to tax in the
total income of the previous year 2009-10 and earlier years. Such undisclosed asset comes to the notice of
the Assessing Officer in the year 2017-18. If the value of the asset in the year 2017-18 is one crore rupees,
the amount chargeable to tax shall be A-B=C
where,
A=Rs.1 crore, B=Rs. (100 x 20/50) lakh= Rs.40 lakh, C=Rs. (100-40) lakh=Rs.60 lakh.