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    Income Declaration Scheme (2016)

    Chapter IX of the Finance Bill, 2016 introduced the Income Declaration Scheme, 2016(“scheme”). It shall come into force from 1stday June, 2016.


    Salient Features of the Scheme:-


    • All persons who have not declared income correctly up to Financial Year 2015-16can come forward and declare such undisclosed income(s);
    • Where income chargeable to tax is in the form of investment in any asset, the cost of acquisition of such asset shall be deemed to be Fair Market Value (FMV) taken into account for the purpose of this scheme1


    • No deduction in respect of expenditure or allowance shall be allowed against the income in respect of which declaration under the scheme is made;


    • The Scheme will remain in force from 1st June, 2016 to 30th September, 2016 for filing of declarations. The payment of taxes, surcharge and penalty must be made by 30th November, 2016;
    • Declaration can be filed online or with the Jurisdictional Principal Commissioner of the Income-tax;


    • Assets specified in the declaration shall be exempt from Wealth Tax;
    • No scrutiny and enquiry under the Income Tax Act or Wealth Tax in respect of such declarations;
    • Immunity from prosecution under the Income Tax Act ,Wealth Tax Act and Benami Transactions (Prohibition) Act,1988 subject to transfer of asset to actual owner;


    • Only one declaration can be made under the scheme by a person. The application may be made of his own or as a representative assessee in respect of income of any other person;


    • Income declared under the scheme is subject to tax @ 45% (30% tax+7.5% surcharge(Krishi Kalyan Cess)+7.5% Penalty);


    • Amount of tax paid (i.e. 45%) shall not be refundable;


    In the following cases the benefit of this scheme is not available:-


    • Where notice have been issued under section 142(1)/143(2)/148/153A/153C;


    • Where a search or survey has been conducted and the time for issuance of notice under the relevant provisions of the Act has not expired;


    • Where the information is received under an agreement with the foreign countries regarding such income;


    • Cases covered under the Black Money Act, 2015;
    • Persons notified under Special Court Act, 1992;
    • Cases covered under Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967,the Prevention of Corruption Act, 1988.






    1The Finance Bill 2016 originally introduced provides that the FMV on the date of commencement of the scheme shall be deemed to be undisclosed income. However, the bill passed by the LokSabha provides the cost of acquisition as FMV for the purpose of the scheme.



    Other Points:


    Where a declaration under the scheme has been made by misrepresentation or suppression of facts, such declaration shall be treated as void.


    In case where any declaration has been made but no tax and penalty referred to the scheme has been paid within in the time specified (on or before 30th November, 2016) the undisclosed income shall be chargeable to tax under the Income-tax Act in the previous year in which such declaration is made.


    Consequences of non-declaration:-


    Where income has accrued or arisen or any asset has been acquired out of such income prior to commencement of the scheme and no declaration in respect of such income is made under the scheme such income shall be deemed to have accrued or arisen or received or the value of asset acquired out of such income shall be deemed to have made in the year in which notice under section 142/143(2)/148/153A/153C of the Act is issued by the Assessing Officer and the provisions of the Act shall apply.


    Undisclosed Income:-


    Income which is chargeable to tax under the Income Tax Act for the Financial Year (s)up to 2015-16 but not charged due to the fact that-


    • No return has furnished under section 139(1);


    • Income has not been disclosed in the return of income;
    • Such income escaped assessment by reason of omission or failure on the part of the person to furnish the return or disclose fully and truly all the material facts necessary for the assessment or otherwise;


    Where undisclosed income is represented by cash (including bank deposits), bullion, investment in shares or any other assets but –


    • In respect of which no return under Wealth Tax Act ,1957 has furnished;


    • Which have not been shown in the return of net wealth furnished by him for relevant assessment year or years;


    • Value of the above has been undervalued in the return furnished for relevant assessment year or years.


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