CONSEQUENCES OF UNDISCLOSED INCOME UNDER INCOME DISCLOSURE
SCHEME, 2016
The last date for declaring
undisclosed income with the Income Tax Department is 30th September
2016. The Department is carrying on survey and raid on the taxpayers evading
tax. Also the department is conducting inquiry and collecting information from
financial institutions, banks, co-operative banks, etc.
Undisclosed
Income
1. Bullion, jewelry
or precious stone
2. Archaeological
collections
3. Drawings,
paintings, sculptures or any work of art
4. Shares
& securities (quoted & unquoted)
5. Immovable
property
6. Interest in a partnership firm
7. Any other
asset such as
i.
Undisclosed Bank Accounts
ii.
Fixed Deposit
iii.
Deposit in Cooperative Bank
iv.
Investment in Credit Co-operative Societies
v.
Unaccounted transactions with financial institutions
etc.
Relating to
any financial year up to 2015-16
Scope of the Scheme
A declaration under the aforesaid Scheme may be made in respect of any
income or income in the form of investment in any asset located in India and
acquired from income chargeable to tax under the Income-tax Act for any
assessment year prior to the assessment year 2017-18 for which the declarant
had, either failed to furnish a return under section 139 of the Income-tax Act,
or failed to disclose such income in a return furnished before the date of
commencement of the Scheme, or such income had escaped assessment by reason of
the omission or failure on the part of such person to make a return under the
Income-tax Act or to disclose fully and truly all material facts necessary for
the assessment or otherwise. Where the income chargeable to tax is declared in
the form of investment in any asset, the fair market value of such asset as on
1st June, 2016 computed in accordance with Rule 3 of the Income Declaration
Scheme Rules, 2016 shall be deemed to be the undisclosed income.
Who
can make a Declaration?
All “Persons”
such as
1. Individuals
2. HUFs
3. Companies
4. Firms
5. Association
of Persons
Amounts payable by declarant
1. Tax @ 30%
of undisclosed income
2. Surcharge @
7.5% of undisclosed income
3. Penalty @
7.5% of undisclosed income
TOTAL 45% OF UNDISCLOSED INCOME DECLARED
Benefits
of Declaration
1. No Wealth
Tax on assets declared
2. No scrutiny
or enquiry under Income-tax Act and Wealth Tax Act in respect of declaration
3. Immunity
from prosecution under Income Tax Act and Wealth Tax Act in respect of
declaration
4. Immunity
from Benami Transactions (Prohibition) Act, subject to transfer of assets by the
benamidar to the real owner before 30.09.2017
Effect of Non-declaration
Undisclosed income and the value of
any asset acquired out of such income in any year up to FY 2015-16 which is not
declared under the Scheme will be brought to tax in the year in which notice is
issued by the Department and all consequences including, interest, penalty
& prosecution under I-T Act will follow accordingly.
Non-Applicability
1. Notice has
been issued under section 142(1)/143(2)/148/153A/153C of IT Act (debarred only
for AY for which notice is issued)
2. Search/Survey
have been conducted
3. Income
sought to be declared is chargeable under the Black Money Act, 2015
4. COFEPOSA
detainees, persons notified under Special Courts Act 1992, cases of prosecution
under NDPS Act, Prevention of Corruption Act, and certain offences under Indian
Penal Code
Clarifications
1. Fair market
value of asset as on 01.06.2016 (determined as per Rule 3) to be declared.
2. Report of
Registered Valuer to be obtained.
3. Where
undisclosed income invested in any asset is declared under the Scheme &
tax, surcharge and penalty are duly paid on its fair market value as on
01.06.2016 then, any capital gains arising upon its sale in future will be
computed by adopting such fair market value as on 01.06.2016 as the cost of
acquisition and the period of holding shall also start from that date.
4. A person is
only ineligible to declare income 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. He is free to declare undisclosed income
for other years for which no notice under the sections has been issued.
5. Where
investment in any asset is partly from explained sources (income already
assessed to tax) and partly from undisclosed income, proportionate reduction
shall be allowed in determining the amount to be declared under the Scheme.
6. Where
assessment has already been completed and case is pending in appeal before any
appellate authority, declaration cannot be filed in respect such income.
However, any undisclosed income for that AY which has not been assessed can be
declared.
7. If a
declaration of undisclosed income is made in good faith but is found ineligible
under the Scheme on account of any of the conditions debarring such declaration,
the harsh consequences of non-declaration under the Scheme shall not apply, but
such income may be assessed under the normal provisions of the Income-tax Act.
8. After the
declaration is made the PCIT/CIT 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.
9.
Information contained in in the declaration is
confidential as in the case of return of income filed by an assessee.
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