TAX MANAGEMENTCentral

Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in hindi

(1)Where the assessee has any income from a source outside India which has not been disclosed in the return of income furnished under sub-section (1) of section 139of the Income-tax Act or the return of income has not been furnished under the said sub-section, interest shall be chargeable in accordance with the provisions of section 234A of the Income-tax Act.
(2)Where the assessee has any undisclosed income from a source outside India and the advance tax on such income has not been paid in accordance with Part C of Chapter XVII of the Income-tax Act, interest shall be chargeable in accordance with the provisions of sections 234B and 234C of the Income-tax Act.

Summary

Assessees are charged interest if they fail to file their return or if they hide foreign income in a filed return.
This interest for return-related defaults follows the rules in Section 234A of the Income-tax Act.
Interest is also mandatory if an assessee does not pay enough advance tax on their undisclosed foreign income.
For advance tax defaults, the interest is calculated based on Sections 234B and 234C of the Income-tax Act.
These interest charges are in addition to the base tax and any penalties that might be imposed.

Practical examples

1Mr. Sharma failed to file his tax return for two years while holding a secret bank account in Switzerland. When caught in 2024, he was charged 30% tax, a huge penalty, and significant interest under Section 234A for the years he didn't file.

2Anjali disclosed her foreign income late in the year. Although she paid the tax, the authorities charged her interest because she should have paid that tax in installments (advance tax) throughout the year as per Sections 234B and 234C.

FAQ

1. Is there interest on late returns under Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?

Yes, interest is chargeable in accordance with Section 234A of the Income-tax Act for defaults in furnishing returns under Section 40 of the 2015 Act.

2. Does the Black Money Act have its own interest rates under Section 40?

No, Section 40 of the Act specifies that interest is charged based on Sections 234A, 234B, and 234C of the Income-tax Act.

3. What happens if I don't pay advance tax on foreign income according to Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015?

Interest will be charged under the provisions of sections 234B and 234C of the Income-tax Act as per Section 40 of the Black Money Act.

Test yourself

Q1.Under Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which section of the Income-tax Act governs interest for not furnishing a return?

Q2.According to Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, interest for failing to pay advance tax is charged under which sections of the Income-tax Act?

Q3.Under Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, interest applies if income was not disclosed in a return furnished under which section of the Income-tax Act?

Q4.For the purpose of interest on advance tax under Section 40 of The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which part of the Income-tax Act defines how advance tax should be paid?

39PreviousSection 39 Recovery by suit or under other law not affected.41NextSection 41 Penalty in relation to undisclosed foreign income and asset.

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