Customer Care No.

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IDS 2016- How to infuse

interest of tax evaders?

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2
The Income Declaration Scheme 2016 (IDS) meant to garner
taxes on undeclared incomes has not enthused public interest
at large so far essentially considering the 45% payout and in all
fairness may not actually culminate into a big kitty for the
Government of India unless certain immediate corrective
measures are taken. The publicity starts with the words ' your
undisclosed income is like a time bomb' may even sound
intimidating to those who may have missed on account of
payment of taxes either deliberately or habitually or by mere
ignorance or for any other selfish reason. Actually the scheme
purpose should be to provide a fresh start to those people to
come in the frontline of the group of people who had been
paying their taxes honestly only with a sense of realization that
they are the potential tax payers. Consider the immunity being
given here as akin to immunity being also given to a start up
business. Both according to me count as potential tax payers to
the Country and must be viewed alike. In fact the person
declaring income is more reassuring than a start up business in
real sense as the start up may not actually yield to additional
Customer
Care No. 91-11tax revenues.

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Apart from the widest forms of publicity it is absolutely necessary to make the scheme broad based and
assessee friendly in its cast. It is necessary to provide reassurances more than anything else to all those
who have not contributed to the tax exchequer in the past that they would not be bothered not only viz
a viz income declared under the scheme but also on income so declared by them in the past for the
years for which a declaration is being made. A three pronged approach is therefore needed to bring sure
success to the Income Declaration Scheme 2016.
Approach No. 1- No scrutiny/reopening of years for which declaration is made
The Government of India needs to provide complete immunity in the previous years of income
declaration so to say to build confidence of each such declarant. It is quite important to note that each
such declarant would be a potential tax payer and therefore it is necessary to provide level playing field
to the declarant to come forward in the larger taxpaying group in the way forward.
Approach No 2--Flexibility to submit more than one declaration/to revise declaration during
scheme period
The Scheme should be enabling one to provide total flexibility to the person declaring undisclosed
income. For instance he or she should have the flexibility to file, rectify, resubmit the declaration as
many times as he or she desires although within the scheme period. Even the person declaring income
must be given an option to withdraw the same at any time during the period of the scheme without any
questions being asked on the same.

Customer Care No. 91-11-

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For instance section 191 of Chapter IX of Finance Act, 2016 provides that any amount of tax
and surcharge paid under section 184 or penalty paid under section 185 in pursuance of a
declaration made under section 183 shall not be refundable. This kind of provision is
undesirable. Hence, CBDT must issue a clarification in this regard to afford revise declaration
and refund for any excess tax paid.
Again section 193 says that a declaration shall be void and shall be deemed never to have
been made under this Scheme in the event of misrepresentation or suppression of facts.
Again it is not wise to consider a declaration as void in any situation given that the person
signing it upfront makes a statement of fact. Even if there is suppression you have to believe
it on its face since the same is voluntary in nature. It is not justifiable to use a declaration
made by a declarant only against him. The Board may issue a clarification in this regard for
the declarant.
Approach No 3--Immunity from indirect taxes
A person who declares income under Income tax Act would wonder whether he would be
asked to pay taxes on the income declared under indirect tax regulations such as VAT or
service tax as there is every possibility of him being cornered tomorrow on the basis of
declaration made under the Income Declaration Scheme 2016. The FAQs do not provide any
clarity in this regard. Much to the confusion in their answer to FAQ No. 2 in
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No.dated
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CircularCare
No 25
30thJune 2016the only assurance given is a for non sharing
of

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