New Delhi: The announcement by finance minister Arun Jaitley categorizing tax evasion in relation to holding of illegal foreign assets as a “predicate offence" under anti-money laundering laws has, for the first time, made concealment of income a criminal offence in India.

At present, tax evasion is a civil offence in the country and offenders are prosecuted under relevant sections of the Income Tax Act, which largely talks about penalties with only some “wilful" default cases inviting prosecution and a jail term.

“With the offence of concealment of income or evasion of tax in relation to a foreign asset proposed to be made a predicate offence under the Prevention of Money Laundering Act, India will join the league of those few countries where tax evasion is a criminal offence," a senior finance ministry official said about the announcement in Jaitley’s budget speech.

Offences under the I-T Act will be the 15th ‘Scheduled Offence’ that would now be put under the predicate offences category following which premier investigating agencies such as CBI, enforcement directorate, customs, police, Narcotics Control Bureau and Sebi will be able to take cognisance and register separate criminal cases under the respective Acts these agencies enforce to check instances of terror financing and narcotics trade.

According to the legal definition, every ‘scheduled offence’ is a predicate offence and the occurrence of the same is a prerequisite for initiating a probe into the offence of money laundering, customs duty violation or any other criminal act punishable and prosecutable in India. “

However, violation of tax laws with a foreign asset connection only has been categorised as a predicate offence as of now and evasion in the domestic arena will continue to be treated under the civil I-T laws," the official said.

The special investigation team (SIT) on black-money also recommended to the government in December last year that tax evasion should be made a serious “criminal offence" under Indian laws to force foreign countries to reveal the names and account details of Indians holding illicit wealth abroad.

Major international economies readily cooperate with a foreign country on tax information exchange matters if the case in question is registered under criminal laws such as PMLA or Narcotic Drugs and Psychotropic Substances Act.

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