Monday, August 29, 2016

Unearth Black Wealth and Buy Peace

India is moving towards a lower tax regime with non-litigious approach. Thus, while compliant taxpayer can expect a supportive interface with the department, tax evasion will be countered strongly. Capability of the department to detect tax evasion has improved because of enhanced access to information and availability of technology. With the objective of “Reducing litigation and providing certainty in taxation”, the Central Government has launched a Scheme called Income Declaration Scheme, 2016, whereby one time opportunity has been given to all the persons, who have not complied with the provision of the Income-tax Act whether resident or non-resident so that they would come forward and take advantage of the scheme and buy peace with the Government.

The new Scheme is broadly framed on the lines of one-time compliance window provided under the Black Money Act, 2015. This Scheme doesn’t have any intention of modifying or altering the rate of tax, surcharge and penalty payable under the Income Tax Act which has been clearly specified in the Scheme itself.

The Scheme provides immunities under the Income-tax Act, 1961, the Wealth -tax Act, 1957 and the Benami Transaction (Prohibition) Act, 1988.

The Scheme: Salient features & Deadline

The Scheme shall apply to undisclosed income which is chargeable to tax and on assets in the form of movable, immovable or otherwise pertaining to AY 2017-18 or earlier years.

The applicant has to disclose income before 30 September, by making declaration in the Form 1 and shall be furnished by the way of

a) electronically under digital signature; or

b) through transmission of data electronically under electronic verification code; or

c) in print form, to the concerned Principal Commissioner or the Commissioner who has the jurisdiction over the declarant.

and an Acknowledgment will be issued in Form 2 to the declarant within 15 days from the end of the month in which the declaration has been furnished.

The declarant has to pay tax, surcharge and penalty as follows:

Total Amount (Tax, Surcharge and Penalty)

1. Minimum 25% of the total amount by 30.11.2016

2. further 25% of the total amount by 31.03.2017

3. Balance amount on or before 30.09.2017

The declarant shall furnish proof of payment of taxes to the tax authorities in Form 3 and the tax authorities shall issue a certificate in Form 4 within 15 days of submission. If the declarant fails to pay the entire amount of tax, surcharge and penalty within the specified date, the declaration shall become invalid.

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