One-time opportunity to declare undisclosed income

A four-month window for all those who haven’t declared their income yet

GN Bureau | May 27, 2016


#income tax act   #enquiry   #no scrutiny   #income declaration   #wealth tax act   #prosecution  


 The government has announced ‘income declaration scheme’, scheduled to open from June 1 this year, for all those who have not declared income correctly in earlier years, asking them to come forward and declare their undisclosed income now.

 
Under the scheme, such income would be taxed at the rate of 30 percent plus a ‘Krishi Kalyan Cess’ and a penalty of 25 percent each on the taxes payable, thereby totalling to 45 percent of the income declared.
 
The scheme would be open till September 30. The payments towards taxes, surcharge and penalty is to be made latest by November 30. The declarations can be filed online or with the jurisdictional Pr. Commissioners of Income-tax across the country.       
 
Here’s a look at some of its features:
•         The scheme would apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.
 
•         Where the declaration is in the form of investment in assets, the fair market value of such asset as on June 1, 2016 would be deemed to be the undisclosed income. However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under the scheme.
 
•         Assets specified in the declaration would be exempt from wealth tax.
 
•         No scrutiny and enquiry under the Income-tax Act or the Wealth tax Act would be undertaken in respect of such declarations.
 
•         Immunity from prosecution under the Income-tax Act and Wealth Tax Act is also provided along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of asset to actual owner within the period specified in the rules.
 
•         Non-payment of total taxes, surcharge and penalty in time or declaration by misrepresentation or suppression of facts would render the declaration void.
 
•         The circumstances in which the scheme would not apply or where a person is held to be ineligible are specified in section 196 (Chapter IX) of the Finance Act, 2016.
 
•         Non declaration of undisclosed income under the scheme would render such undisclosed income liable to tax in the previous year in which it is detected by the income tax department. Other penal consequences will also follow accordingly.
 

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