Income Declaration Scheme-2016

Amidst Country creating a ‘Clean India Movement’ Revolution, Income disclosure Scheme(IDS), a four month long window compliance allowed Tax Evaders to come clean their black stuff. Sources say; More than 64000 people declared  hidden assets worth around Rs.65,250 under (IDS).

The scheme came in to force on 1 June 2016 and became an opportunity for the people who didn’t disclose income in the past or evaded their taxes. Under the scheme, such person can declare the undisclosed income and pay tax, surcharge and penalty on the declared undisclosed income.The person making declaration under the scheme will have to pay income tax at the rate of 30% of the value declared plus surcharge 25% there on in addition to 25% penalty on the tax computed based on the above declaration which in totality amounts to 45% of the tax rate.

Finance Minister Arun Jaitly reported that 64,275 people revealed assets under the IDS. He further mentioned that this figure may slightly go up once the department is done with the final verification.

The biggest advantage of the scheme is that once assesse declares income under this, they will get immunity from penalty or prosecution proceedings under the income-tax act,1961. As per Section 271(1)(c) the tax payer shall be liable to pay penalty which could be 100%-300% of the tax evaded or sought to be evaded by concealing his income of furnishing inaccurate particulars of income. Which is then amended in the union Budget 2016 by proposing a new section 270A effective from 1st April 2017 in place of existing section 271. The new provisions proposed that penalty may be levied on under-reported income at the rate of 50% of the tax payable and 200% of the tax payable on mis-reported.

In case of company, firm, local authority, the tax payable on under-reported income shall be calculated as if such income is the total income. And in case of Individual and HUF tax rate would be 30%.

IDS would prove beneficial for those opting for it, as it would reduce tax and penalty burden along with prosecution proceedings. It also proved a win-win situation, as the government will earn about Rs. 30,000 crore from income taxes which is more than two third of the total budget of Rest. 38,500 crore kept aside for the Rural job guarantee scheme MGNERGA. Jaitley said, that most of those who availed the scheme were not small traders but “ people with significant resources”.

Even if good response has been received, yet the complete objective of the black money act has not been acheived. Still we can say, a good start off with an eye on the black money in the ocean where half of the market runs on parallel economy.

Source- www.moneycontrol.com