The Income Declaration Scheme 2016 – Details & Guidelines

The Budget 2016-17 has proposed to provide a limited period ‘Tax Compliance Window‘ for domestic taxpayers to disclose undeclared income of previous years. This provision has now been incorporated in the latest Finance Bill 2016  and is referred to as The Income Declaration Scheme 2016 (TIDS-2016).

This scheme provides an opportunity to all persons who have not declared income correctly in earlier years (or) who have not paid full taxes in the past to come forward and declare such undisclosed income(s) or assets.

The scheme shall remain in force for a period of 4 months. The declaration(s) can be submitted from 1^st June, 2016. The last date to submit the declaration under TIDS-2016 scheme is 30^th September, 2016.  

The Income Declaration Scheme 2016 – Details, Guidelines & FAQs

Below are the salient features of TIDS-2016 in FAQ format;

• What can be declared under TIDS? –
  • The scheme shall apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to Financial Year 2015-16  or previous years. 
  • However, foreign assets or income to which the Black Money Act 2015 applies are not eligible for declaration under this scheme.
  • If one has failed to furnish Income Tax Return of previous years under section 139 of the Income-tax Act, such income can now be declared under this new scheme. (In case if you have received any notices under section 142(1) or 143(2) or 148 or 153A or 153C, your case may not be eligible for this scheme).
• If undisclosed income is in the form of an Asset, what will be the value of the such undisclosed Asset? – Where the declaration is in the form of investment in assets, the Fair Market Value of such asset as on 1^st June 2016 shall be deemed to be the undisclosed income under the Scheme.
• Can the declarant claim any expenses or income tax deductions or allowances in respect of income declared under TIDS? – No deduction of expenditure or allowance shall be allowed.
• What is the applicable Income Tax rate on such income? – The declarant will have to pay following tax, cess and penalty at the following rates on the amount of Income Disclosed;
  • Income Tax at the rate of 30% on the declared income,
  • Krishi Kalyan Cess at the rate of 25% on the taxes (above) payable (i.e., at the rate of 7.50% of the disclosed income) &
  • Penalty at the rate of 25% on the taxes (above) payable (i.e., at the rate of 7.50% of the disclosed income)
  • So, the total applicable income tax rate is 45% (30%+7.5%+7.5%) of the income declared under the scheme.
• What is the last date to pay the taxes? – The payments towards taxes, surcharge & penalty must be made latest by 30^th November, 2016. If taxes are not paid before the due date, the declaration made under the scheme will become void.
• Who has to submit & sign the Declaration? – Below is the list of category of Declarants & respective signing authorities who can sign the Declaration;
• Where to submit the declaration form? Declarations can be filed online (exact procedure is yet to be announced) or with the jurisdictional Principal Commissioners or the Commissioner of Income-tax across the country.       
• Is it possible to submit multiple Declarations? – No, only one declaration has to be filed.
• Is it possible to get any Refund of the Taxes paid? – No, any amount of tax and surcharge paid under this scheme shall not be refundable.

Click on the below image to download ‘The Income Declaration Scheme 2016’, as provided in the Finance Bill 2016.

TIDS scheme & Benefits to the Declarant

• Will there be any scrutiny on these declaration(s)? – No Scrutiny and enquiry under the Income-tax Act or the Wealth tax Act shall be undertaken in respect of such declarations.
• Is Wealth Tax levied on the disclosed income? – Assets specified in the declaration shall be exempt from Wealth tax.
• Will there be any impact on the already filed ITRs? – Undisclosed income declared will not affect the completed tax assessments.
• Immunity from prosecution.
• Amount of income declared under this scheme will not be included in the Total Income of the declarant for any assessment year under the Income Tax Act.

The Direct Tax Dispute Resolution Scheme, 2016

The Govt is also launching another scheme which is called as ‘direct tax dispute resolution scheme’ with effective from 1st June, 2016. Under this scheme, a declarant can file a declaration in relation to tax arrears (dues) or specified tax in respect of which appeal is pending before the CIT-A (Commissioner of Income-tax – Appeals).

The CBDT (Central Board of Direct Taxes) has requested the stake holders and general public to bring out issues/points which in their opinion would require further clarification/guidance regarding this scheme. These issues/points may be submitted by 25th May, 2016 at the email address media.cbdt@gmail.com or by post at the following address:

Commissioner of Income Tax, Media & Technical Policy, Official Spokesperson
Central Board of Direct Taxes, Room No.151,
North Block,
New Delhi-110001.

(The envelopes should be marked with “The Income Declaration Scheme 2016 / The Direct Tax Dispute Resolution Scheme.”) (The CBDT is expected to release the ‘declaration form template’ by the end of this month)

A similar ‘Voluntary Disclosure Scheme‘ was launched way back in 1997. This was successful to certain extent. So, we need to wait and see how far this new scheme will be successful in bringing people with domestic Black Money to books. 

Kindly share your views on ‘The Income Declaration Scheme 2016.’

Latest News (01-Oct-2016) : Income Declaration Scheme 2016 unearths around Rs 65,250 crore of hitherto Undeclared Income and Assets. Around 64,275 declarations have been filed under IDS-2016 up to the midnight of 30th September, 2016. (Source – pib)

Latest News (15-July-2016) : Taking into consideration the practical difficulties of the stakeholders for making tax payments by 30.11.2016 , the Government has decided to revise the time schedule for making payments under the Scheme as under:
(i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016; (ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017 and (iii) the balance amount to be paid on or before 30.9.2017.

For clarifications & FAQs on IDS 2016, kindly visit this link.

Continue reading : How to declare Undisclosed Income (Black-money) under Pradhan Mantri Garib Kalyan Yojana 2016-2017? | New Income Declaration Scheme 2017.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post Published on : 15-May-2016) (Reference – PIB)