Monday, August 29, 2016

Income chargeable to tax

Section 183(1) of the Income Tax Act, 1961 states that any person can make a declaration in respect of any income chargeable to tax under the Income-tax Act. However, Section 183(4) of the act impliedly overrides the whole Income-tax Act and states that “No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made.”

It is therefore clear that the declarant shall not be allowed to claim any deduction of any expenditure against the declared income.

Technically, there is no clear restriction for set-off of losses against the income declared by the applicant. If we look at section 5(1) of the Black Money and Imposition of Tax Act, 2015, it clearly puts a restriction on “set-off of any loss” whether or not it is allowable in the Income-tax Act. However, the declarant may take the benefit of set off of losses against declarant’s income in this Scheme.

Furthermore, TDS shall be allowed in those cases where the related income is declared under the new scheme and the TDS has not already been claimed in the return of Income filed for any previous A.Y.

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