With the Income Tax Department discovering Rs. 43,000 crore of undisclosed income in the last two fiscal years and the problem of black money still prevalent in India, the Ministry of Finance on 11th of May introduced the Income Declaration Scheme 2016 in a bid to tackle the problem.
So, what is the Income Declaration Scheme 2016?
It is a one time opportunity for people who have not paid full taxes, declared their income or investment in any asset representing unrevealed income in the past to disclose their income to the government between a compliance window of four months, starting from 1st June 2016 and ending on 30th September 2016. The tax, surcharge and penalty have to be paid by 30th November 2016. This offers them the chance to clear their past offenses. In order to do so, they must pay tax (at 30%), KrishiKalyan Cess (at 7.5%), and penalty (at 7.5%) totalling to 45% of the total undisclosed income declared.
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The benefits of the Income Declaration Act
• The biggest advantage of this scheme is that the declarant will be exempted from penalty or inquiry under Income Tax Act and Wealth Tax Act in respect of declaration.
• Immunity from prosecution under the Income Tax Act and Benami act 2016 to the regard of the declaration.
• Immunity from Benami Transactions (Prohibition) Act, subject to transfer of assets from the Benamidar to the real owner before 30.09.17. The Capital Gain Tax will not be levied on the Benamidar.
Declaration can be void due to the following reasons:
• Misinterpretation or the suppression of the actual undisclosed income.
• Non payment of the combined taxes by 30th November 2016
What happens in case of non-compliance?
The effect of non-compliance can be severe as any undisclosed income or asset not declared in any year up to FY 2015-16 will be be brought to notice is issued by the department, and penalty and prosecution of defaulters will be carried out accordingly.
What do you need to fill the forms?
To fill the form for Income disclosure, an assessee should have a valid PAN card and be registered in the e-filing portal.
BENEFITS OF THE SCHEME
• In certain cases, depending on the facts and circumstances, the effective tax rate may, as per our understanding, work out to 31% only or even lesser than that.
• Complete secrecy of the information furnished by the declarant will be maintained by the Department and the same shall not be admissible as evidence in any other proceedings under the Income-tax Act.