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Income Declaration Scheme 2016
Income Declaration Scheme 2016
Taxation
Income Declaration Scheme, 2016 an
Opportunity
As a wise measure of the Government of India to use the economys black money for productive
purposes, Income Declaration Scheme, 2016 has been incorporated as Chapter IX of the Finance
Act, 2016, which provides an opportunity to everyone to officially convert their black money into
white money. Union Finance Minister Shri Arun Jaitley in his Union Budget speech this year used
the phrase Past Transgressions which recognizes the past wrongdoings of taxpayers and offers them
an exit door by way of a payment of 45% of their undisclosed income. This step has been lauded as a
welcome step for the purpose of removal of black money from the Indian economy. Read on to know
more about this scheme
Introduction
Government has taken a wise initiative to convert
the economys black money into white which could
be used for productive purposes. For this, Income
Declaration Scheme, 2016 has been incorporated
as Chapter IX of the Finance Act, 2016, which
provides an opportunity to everyone to officially
convert their black money into white. Union Finance
Minister Shri Arun Jaitley in his Union Budget speech
this year had used the phrase past transgressions
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Taxation
As per the Scheme, persons who have not declared
their income correctly chargeable to tax under the
Income-tax Act, 1961 (IT) for any assessment year
prior to the assessment year beginning on the 1st
day of April 2017, they can come forward and declare
such undisclosed income(s).
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Tax Rate
Surcharge (to
be called Krishi
Kalyan Cess)
Penalty
Total
Rate
Effective
Rate
30% of Total Income 30.00%
25% of Tax
7.50%
25% of Tax
7.50%
45.00%
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Taxation
Signatories for Declaration:
Declaration under the said scheme can be filed by
any person but shall only be signed by the person
authorized to sign Income Tax Return as per Incometax Act. These persons are:
S. Person
Signing Authority
No.
1
Individual a) By the individual himself or if
he is absent from India, then
his authorized representative.
b) Where Individual is mentally
incapacitated, by his guardian
or any other competent person
on his behalf.
2
HUF
By Karta, where Karta is absent from
India or mentally incapacitated, by
any adult member of such HUF
3
Company By the Managing Director or by any
Director, if there is no Managing
Director(MD)/MD is unable to sign
due to unavoidable reason
4
Firm
By the Managing Partner or where
there is no managing partner(MP)/
MP is unable to sign due to
unavoidable reason, by any other
partner
5
Any other Any member or principal officer of
Association the association
6
Any other By that person or any other person
Person
competent to act on his behalf.
Why would People Declare Income under
this Scheme?
The Scheme is all about declaration of the
undisclosed domestic income. So, there arises a
question why people would disclose their income
under this Scheme and pay tax at such a higher rate.
The Scheme that has been designed thoughtfully,
enumerate the below-mentioned benefits:
1. Declared income will not be added to the
declarants/concerned persons total income that
is already filed under Income-tax Act, 1961.
Asset
Bullion, jewellery
or precious stone
or archaeological
collections,
drawings, paintings,
sculptures or any
work of art
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Taxation
Asset
Shares and
securities (quoted
on recognized stock
exchange)
Shares and securities
(unquoted)
Unquoted Shares
and securities (other
than equity shares in
a company)
An immovable
property
Interest of a person
in a partnership
firm or AOP or LLP
of which he is a
member
Note: Subsequent sale of assets disclosed in form of investment shall be liable to tax under the head Capital Gains. The Cost
of Asset for the said purpose would be the FMV as calculated above as on 1st June 2016 and the period of holding shall start
from the said date.
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Taxation
Procedure for Declaration
1. A declaration of income or income in the form of
investment in any asset under Section 183 shall
be made in Form-1.
2. The declaration shall be furnished:(a) Electronically under digital signature; or
(b) Through transmission of data in the form
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.
3.
The
Principal
Commissioner
or
the
Commissioner shall issue an acknowledgement in
Form-2 to the declarant within fifteen days from
the end of the month in which the declaration
under section 183 has been furnished.
4. The proof of payment of tax, surcharge and
penalty shall be furnished by the declarant in
Form-3.
5. If the declarant fails to pay the tax, surcharge
and penalty in respect of the declaration made
by 30.11.2016, such declaration filed shall be
deemed never to have been made under this
Scheme.
6.
The
Principal
Commissioner
or
the
Commissioner shall grant a certificate in Form4 to the declarant within fifteen days of the
submission of proof of payment of tax, surcharge
along with penalty.
Invalid/Void Declaration
There are some instances under which the declaration
made will not be considered as valid. These are:
1. If the declarant fails to pay entire amount of tax
including surcharge and penalty on or before
30th November 2016
2. Where the declaration has been made by
misrepresentation or suppression of facts or
information.
3. Each person is allowed to make only one
declaration in respect of his income or as a
representative assessee in respect of income of
any other person. If any such other declaration
was subsequently made, it shall be treated as
void.
In above cases, although the declarant may not be
subjected to any penal consequences under the
scheme but the information submitted may be
used by the revenue authorities for assessment/
reassessment of such income under the existing
provisions of the Act.
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If you are too busy to laugh, you are too busy. - Proverb
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