Income Declaration Scheme 2016 analysis

By | May 29, 2016

Income Declaration Scheme 2016

( Income Declaration Scheme 2016  : Chapter IX of the Finance Act 2016)

Income Declaration Scheme 2016

Analysis of  Income Declaration Scheme 2016

  • Income Declaration Scheme 2016  incorporated as Chapter IX of the Finance Act 2016

  • Income Declaration Scheme 2016 shall remain in force for a period of 4 months from 1st June, 2016 to 30th September, 2016
  • Income Declaration Scheme 2016 shall 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 1st June 2016 shall be deemed to be the undisclosed income under the Income Declaration Scheme 2016
  • 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.
  • Income Declaration Scheme 2016 provides an opportunity to all persons who have not declared income correctly in earlier years to declare that undisclosed income under this scheme
  • Income declared under Income Declaration Scheme 2016 would be taxed at the rate of 30% plus a‘Krishi Kalyan Cess’of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, thereby totalling to 45% of the income declared under the scheme.
  • Taxes, surcharge & penalty under Income Declaration Scheme 2016 must be made latest by 30th November,2016.
  • Non-payment of total taxes, surcharge & penalty in time or declaration by misrepresentation or suppression of facts shall render the declaration made under  Income Declaration Scheme 2016 void.
  • 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.
  • The circumstances in which the Income Declaration Scheme 2016  shall 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 Income Declaration Scheme 2016 will 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.
  • Where an undisclosed income in the form of investment in asset is declared under the Scheme and tax, surcharge and penalty is paid on the fair market value of the asset as on 01.06.2016, then the declarant be liable for capital gains on sale of such asset in the future. (refer  FAQ’s on Income Declaration Scheme 2016 )
  • The person will  be ineligible from declaration for those assessment years for which a notice under section 142(1)/143(2)/148/153A/153C is issued and the proceeding is pending before the Assessing Officer.(refer  FAQ’s on Income Declaration Scheme 2016 )
  • If the notice under section 142(1)/143(2)/148/153A/153C has been issued but not served on the declarant on or before 31st day of May, 2016 , then he is eligible to file declaration in respect of  those assessment years for which a notice has been issued.(refer  FAQ’s on Income Declaration Scheme 2016 )
  • In a case where the undisclosed income is represented in the form of investment in asset and such asset is partly from income that has been assessed to tax earlier, then  the method of computation of undisclosed income represented by such undisclosed asset for the purposes of the Scheme will be as per Answer 4 to FAQ’s on Income Declaration Scheme 2016 
  • Declaration can not be made of undisclosed income which has been assessed to tax and the case is pending before an Appellate Authority .( refer  FAQ’s on Income Declaration Scheme 2016 ) However  Assessee can declare other undisclosed income for the said assessment year which has not been assessed under the Income-tax Act.
  • the person is not eligible to make a declaration under the Scheme if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued. In this case, however, the person is eligible to file adeclaration in respect of an undisclosed income in relation to an assessment year which is prior to assessment years relevant for the purpose of notice under section 153A. (refer  FAQ’s on Income Declaration Scheme 2016)
  • In case of survey operation the person is barred from making a declaration under the Scheme in respect of an undisclosed income in which the survey was conducted. The person is, however, eligible to make a declaration in respect of an undisclosed income of any other previous year. (refer  FAQ’s on Income Declaration Scheme 2016)
  • Where a search/ survey operation was conducted and the assessment has been completed but certain income was neither disclosed nor assessed, then such unassessed income can be declared under the Scheme .(refer  FAQ’s on Income Declaration Scheme 2016)
  • In respect of such undisclosed income which has been duly declared in good faith but not found eligible under Income Declaration Scheme 2016 , then such income shall not be hit by section 197(c) of the Finance Act, 2016. However, such undisclosed income may be assessed under the normal provisions of the Income-tax Act, 1961.
  • If a person declares only a part of his undisclosed income under the Scheme, then he will not get immunity under the Scheme in respect of the part income that is undeclared.
  • Principal Commissioner/Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other enquiry will be conducted by him at the time of declaration.
  • Information in respect of declaration made is confidential as in the case of return of income filed by assessees.

Related Post 

  1. FAQ’s on Income Declaration Scheme 2016
  2. Jurisdiction for making declaration under Income Declaration Scheme 2016
  3. Income Declaration Scheme Rules 2016
  4. Income Declaration Scheme 2016 Explanatory notes
  5. Income Declaration 2016 , Declaration & Tax Payment Date Notified
  6. THE INCOME DECLARATION SCHEME 2016
  7. Income Declaration Scheme 2016 to open from 1st June 2016
  8. CBDT asks issues from public on Income Declaration Scheme 2016 & Direct Tax Dispute Resolution Scheme 2016
  9. THE DIRECT TAX DISPUTE RESOLUTION SCHEME 2016
  10. Govt proposed scheme to declare undisclosed income by paying 45% tax
Direct Taxes Ready Reckoner Service Tax Ready Reckoner Company Law Ready Reckoner tax deduction at source
New Books Released on Tax , GST and law

2 thoughts on “Income Declaration Scheme 2016 analysis

  1. Pingback: Form for Declaration under Income Declaration Scheme 2016 - Tax Heal

  2. Pingback: Tax Heal

Leave a Reply