Income Declaration Scheme

The Government has announced an extension of a deadline under the Income Declaration Scheme.
About Income Declaration Scheme

• Income Declaration Scheme 2016 came into effect from 1 June, 2016. It’s an opportunity for those who didn’t disclose income or pay taxes thereon in the past.
• Under this scheme, such persons can declare the undisclosed income and pay tax, surcharge and penalty on the declared undisclosed income.
• Declaration of undisclosed income or asset should have been chargeable to tax for any assessment year prior to the assessment year 2017-18.
• The person making a declaration under the scheme will have to pay income tax at the rate of 30% of the value of undisclosed income plus a surcharge of 25% thereon.
• Additionally, the person will be liable to pay a penalty at the rate of 25% of the tax, which would make the total payment 45% of the undisclosed income.
• The Centre has declared 30 September as the last date for making a declaration and 30 November as the date by which the tax, surcharge and penalty may be paid.
• Revised provisions of Income Declaration Scheme: According to the new plan, a minimum of 25 per cent of the tax, surcharge and penalty is to be paid by November 30, 2016, another 25 per cent by March 31, 2017, and the remaining amount by September 30, 2017.
• The previous deadline for the entire payment of the tax, interest, and penalty was November 30, 2016.
• If one have declared additional income but not paid taxes by the end of the deadline, the individual/company will be treated as not having made any declaration. Additionally, income tax rate as applicable in a normal case for the previous tax year, would be charged.
• only one declaration is allowed – multiple declarations will not be entertained. In case of multiple declarations, only the first one will be considered as valid.
• If the declaration is made by concealing or distorting facts, it will be considered as invalid.
• Paying the tax and penalty as notified after declaring the additional income/assets, that amount will not be added to your income in any assessment years. It will be considered as disparate from the normal income tax cycle.
• If assets – immovable or movable – are part of income or wealth declaration, the fair market value of the asset as on June 1, 2016, would be considered as the undisclosed income.
• In case of a declaration made by a company or firm, the assets/income declared by the firm/company will not be counted while calculating the wealth or income of any related or partner firms.
• The undisclosed income cannot be considered as benami transaction in certain cases, where the investment is made in an asset, if the said asset is transferred to the person making the declaration or their legal representative.
• It is not mandatory to file the valuation report of the undisclosed income represented in the form of investment in asset along with the declaration. However, the declarant should have the valuation report. While e-filing the declaration on the departmental website a facility for uploading the documents will be available.
• A person can not declare under the Scheme his undisclosed income which has been acquired from money earned through corruption. If such a declaration is made and in an event it is found that the income represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 193 of the Finance Act, 2016.
• Assets declared under Income Declaration Scheme 2016 shall be exempt from Wealth tax
• No Scrutiny and inquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of declaration made under Income Declaration Scheme 2016
• 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.

By: Vishal