Wednesday 29 June 2016

Income Declaration Scheme, 2016 - Disclose your Income and pay 45% tax - No Scrutiny

The Income Declaration Scheme, 2016 introduced by Finance Act 2016 is a one-time disclosure scheme which provides an opportunity to all persons who have not declared income correctly in earlier years to come forward and declare such undisclosed incomes.

  1. The scheme opens only for a period of 4 months from 1st June, 2016 to 30th September, 2016 for filing of declarations and payments towards taxes, surcharge & penalty must be made latest by 30th November, 2016. 
  2. Individuals , HUFs, companies, firms or any other associations can avail the opportunity
  3. Declarations can be filed online or with the jurisdictional Pr. Commissioners of Income-tax across the country.
  4. Assets specified in the declaration shall be exempt from Wealth tax.
  5.  No Scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations.
  6. Tax totalling Rs. 45% of undisclosed income shall be payable under this scheme (Tax 30% +  Krishi Kalyan Cess 25% of Taxes+ penalty 25% of the taxes)       
  7. The scheme shall apply to undisclosed income and any other income form any investment in assets, pertaining to Financial Year 2015-16 or earlier.
  8. Where the declaration is related to investment in assets, the Fair Market Value of such asset as on 1st June 2016 shall be deemed to be the undisclosed income under the Scheme. However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.
  9. 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.
  10.  The Declaration will be Void in case of non-payment of total taxes, surcharge & penalty in time or declaration by misrepresentation or suppression of facts.
  11. In case of non-declaration of any undisclosed income under the Scheme, the undisclosed income liable to tax in the previous year in which it is detected by the Income tax Department and other penal consequences will also follow accordingly.
  12. One would not be eligible for declaration under the scheme if the undisclosed income relates to an assessment year, where a income tax has served a notice (on or before 31 May 2016) to the assessee under section 142, 143(2), 148, 153A or 153C.