Few Words about the scheme:-
i. The Income Declaration Scheme,2016 is incorporated as Chapter IX of
Finance Act 2016 and is covered in section 181 to section 199.
ii. It shall come into force on 1st day of June 2016
iii. This is one time Opportunity.
Declaration of undisclosed income:-
(1) Any person (whether Resident or Non Resident) can make declaration
of any income chargeable to tax under Income-tax act for any assessment year
prior to beginning of AY 2017:-
(a) For which he has failed to furnish return under section 19 of
Income-tax act,
(b) Income which he has failed to disclose in a return furnished earlier
before commencement of this scheme.
(c)Income which has escaped assessment by reason of omission or
failure on part of such person.
(2) If the income which is chargeable to tax is in form of investment in
any asset then the fair market value of such asset as on 1st June 2016 shall be
deemed to be undisclosed income.
(3) No deduction in respect of any allowance or expenditure shall be
allowed against such undisclosed income.
(4) The declaration can be made on or before 30th day of September 2016.
Charge of Tax & Surcharge:
The undisclosed
income shall be charged at the rate of 45%. The breakup of this 45% is as
follows-
1. 30% as income tax,
2. 7.5% as krishi kalyan surcharge which will be used for agriculture
and rural economy,
3. 7.5% as penalty.
Manner of declaration:-
1. The declaration shall be made to Principal Commissioner or the
Commissioner.
2. One person shall be entitled to one declaration however if the person
make another declaration it shall be Void.
3. Can be filed online or in print form.
Time for Payment of Tax:-
1. Amount not less than 25% of Tax, surcharge and penalty is to be paid
till 30th November 2016,
2. Amount not less than 50% of Tax, surcharge and penalty as reduced by
the amount paid earlier is to be paid till 31st March 2017,
3. The whole amount of Tax, surcharge and penalty as reduced by amount
paid earlier is to be paid till 30th day of September 2017.
The Declarant shall file the proof of payment with Principal
Commissioner or Commissioner as the case may be.
If the declarant fails to pay amount then it shall be deemed that no
declaration have been made under this scheme.
Undisclosed Income declared not to be included in Total Income:-
The amount which is disclosed under this scheme shall not be included in
the total income of the declarant for any AY if the declarant may payment of
Tax, Surcharge and penalty on time.
Undisclosed Income declared not to effect finality of completed
assessments:-
A declarant shall not be entitled to Re-open any assessment or reassessment
made under Income Tax Act or Wealth-tax Act.
Undisclosed Income declared not to be treated as benami transaction in
certain cases:-
If the declaration of undisclosed income is made in the form of
investment in any asset, the provisions of Benami Transaction (Prohibition)
Act, 1988 shall not apply if the asset existing in the name of Benamidaris
transferred to the declarant before 30th day of September 2017.
Tax in respect of voluntary disclosed income not refundable:-
Any amount of Tax, Surcharge and penalty paid in pursuance of the scheme
shall not be refunded.
Immunity:-
1. Assets declared exempt from wealth Tax.
2. No scrutiny/Enquiry under Income Tax/wealth tax in respect of such
declarations.
3. Immunity from prosecution under Income Tax/Wealth Tax.
4. Immunity from Benami Transactions (Prohibition) Act 1988 subject to
certain conditions mentions above.
Scheme not to apply to certain persons:-
The provisions of the scheme shall not apply –
1. In relation to any income chargeable to tax under Income Tax Act for
any PY before 1st April 2016-
(a) Where notice U/s 142/143(2)/148/153A/153C of income tax has been
issued in respect of such assessment year and proceeding is pending before AO.
(b) where a search has been conducted under section 132 or requisition
has been made under section 132A or a survey has been carried out under section
133A of the Income-tax Act in a previous year and a notice under 143(2) for the
assessment year relevant to such previous year or a notice under section 153A
or under section 153C for an assessment year relevant to any previous year
prior to such previous year has not been issued and the time for issuance of
such notice has not expired.
(c) where any information has been received by the competent authority
under an agreement entered into by the Central Government under section 90 or
section 90A of the Income-tax Act in respect of such undisclosed asset.
Removal of Doubts:-
The following declaration is made-
1. Where any declaration is made but no amount of tax, surcharge and
penalty is paid within the tine specified the undisclosed income shall be
chargeable to tax under the Income Tax Act in the PY in which such declaration
is made.
2. Where any income is accrued, arisen or received or any asset is
acquired out of such income before the commencement of this scheme and no
declaration is made of such income in this scheme-
(a) Such income shall be deemed to accrue, arise or receive as the case
may be, or
(b) Value of such assets acquired out of such income shall be deemed to
have been acquired or made,
In the year in which notice U/s 142(2)/143/148/153A/153C is issued by AO
and provisions of Income Tax Act shall apply accordingly.
3. Notwithstanding anything contained in this Scheme, where a
declaration has been made by misrepresentation or suppression of facts, such
declaration shall be void and shall be deemed never to have been made under
this Scheme.
Forms to be used:-
1. Form-1 for declaration of Income.
2. Form-2 Acknowledgement to be issued by Principal Commissioner or
Commissioner within 15 days from the end of the month in which declaration is
made.
3. Form-3 proof of payment of tax, surcharge and penalty made pursuant
to the acknowledgement in form-2 shall be furnished by such declarant.
4. The Principal Commissioner or the Commissioner shall grant a
certificate in Form-4 to the declarant within fifteen days of the submission of
proof of payment of tax, surcharge and penalty by the declarant in respect of
the income so declared.
