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The Income Declaration Scheme 2016 Analysis and suggestions - total cost of 25 in case of hard earned legitimate income and 55 in case of ill-gotten income with benefit of clean all sins can really work. Don t penalise just tax them.

The Income Declaration Scheme, 2016 – Analysis and suggestions - total cost of 25% in case of hard earned legitimate income and 55% in case of ill-gotten income with benefit of clean all sins can really work. Don’t penalise just tax them. - Income Tax - Direct Tax Code - DTC - By: - CA DEV KUMAR KOTHARI - Dated:- 11-3-2016 - Important links and references: The Income Declaration Scheme, 2016 found within the Finance Bill 2016 Income-tax act, 1961 Wealth Tax Act 1957 Other article on the same sub .....

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n will be in respect of undisclosed income (as per valuation method) as follows: Tax 30 % + Krishi Kalyan Surcharge 25% of tax 7.5% + Penalty 25% of tax 7.5% Total disclosure cost 45% Non-payment of above cost , within due date shall render declaration invalid and action can be taken for reassessment to include income in Assessment Year in which declaration is made. Therefore one must be very careful to ensure fund availability for payment of tax. If a declaration is made and the tax cost is not .....

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enactment is the Income-tax Act, 1961 Fair market value of assets - a favourable tax, if price has fallen : In case of disclosure of assets, fair market value of asset on the day on which the scheme come into force will be considered, valuation will be as per prescribed method. Therefore, in case of assets acquired at higher valuation in past and which remains undisclosed, a benefit can be availed because fair market value, which is lower, on the day when scheme comes into force will be taken. T .....

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rk of art commanded high premium but have fallen sharply. Such assets can be disclosed with lower tax impact. The scheme can be made more popular and result oriented if the following suggestions can be incorporate in the scheme: Total cost be reduced to about 25% in case of non-government persons, who disclose income/ wealth earned and accumulated by legitimate means, subject to minimum declaration of Rs. One crore and payment of tax of ₹ 25 lakh. At higher cost of 55% clean all sins schem .....

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not good to penalise rather tax them at higher rate. A requirement to pay penalty may cause a mental block in declaration. The Income Declaration Scheme, 2016 is reproduced with highlights added by author, for easy understanding and analysis. Statutory Provisions THE FINANCE BILL, 2016 Short title and commencement 178. (1) This Scheme may be called the Income Declaration Scheme, 2016. (2) It shall come into force on the 1st day of June, 2016. Definitions 179. In this Scheme, unless the context o .....

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before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year beginning on the 1st day of April, 2017- (a) for which he has failed to furnish a return under section 139 of the Income-tax Act; (b) which he has failed to disclose in a return of income furnished by him under the Income-tax Act before the date of commencement of this Scheme; (c) wh .....

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ket value of any asset shall be determined in such manner, as may be prescribed. (4) No deduction in respect of any expenditure or allowance shall be allowed against the income in respect of which declaration under this section is made. Charge of tax and surcharge 181. (1) Notwithstanding anything contained in the Income-tax Act or in any Finance Act, the undisclosed income declared under section 180 within the time specified therein shall be chargeable to tax at the rate of thirty per cent. of .....

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ax and surcharge under section 181, be liable to penalty at the rate of twenty-five per cent. of such tax. Manner of declaration 183. (1) A declaration under section 180 shall be made to the Principal Commissioner or the Commissioner and shall be in such form and be verified in such manner, as may be prescribed. (2) The declaration shall be signed,- (a) where the declarant is an individual, by the individual himself; where such individual is absent from India, by the individual concerned or by s .....

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y unavoidable reason such managing director is not able to sign the declaration or where there is no managing director, by any director thereof; (d) where the declarant is a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign the declaration, or where there is no managing partner as such, by any partner thereof, not being a minor; (e) where the declarant is any other association, by any member of the association or the principal of .....

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l be void. Time for payment of tax 184. (1) The tax and surcharge payable under section 181 and penalty payable under section 182 in respect of the undisclosed income, shall be paid on or before a date to be notified by the Central Government in the Official Gazette. (2) The declarant shall file the proof of payment of tax, surcharge and penalty on or before the date notified under sub-section (1), with the Principal Commissioner or the Commissioner, as the case may be, before whom the declarati .....

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assessment year under the Income-tax Act, if the declarant makes the payment of tax and surcharge referred to in section 181 and the penalty referred to in section 182, by the date specified under sub-section (1) of section 184. Undisclosed income declared not to affect finality of completed assessments 186. A declarant under this Scheme shall not be entitled, in respect of undisclosed income declared or any amount of tax and surcharge paid thereon, to re-open any assessment or reassessment made .....

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n the name of a benamidar is transferred to the declarant, being the person who provides the consideration for such asset, or his legal representative, within the period notified by the Central Government. Tax in respect of voluntarily disclosed income not refundable 188. Any amount of tax and surcharge paid under section 181 or penalty paid under section 182 in pursuance of a declaration made under section 180 shall not be refundable. Declaration not admissible in evidence against declarant 189 .....

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g contained in this Scheme, where a declaration has been made by misrepresentation or suppression of facts, such declaration shall be void and shall be deemed never to have been made under this Scheme. Exemption from wealth-tax in respect of assets specified in declaration 191. (1) Where the undisclosed income is represented by cash (including bank deposits), bullion, investment in shares or any other assets specified in the declaration made under section 180- (a) in respect of which the declara .....

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any rules made thereunder,- (i) wealth-tax shall not be payable by the declarant in respect of the assets referred to in clause (a) or clause (b) and such assets shall not be included in his net wealth for the said assessment year or years; (ii) the amount by which the value of the assets referred to in clause (c) has been understated in the return of net wealth for the said assessment year or years, to the extent such amount does not exceed the voluntarily disclosed income utilised for acquirin .....

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isions of sub-section (1) shall not apply unless the conditions specified in sub-sections (1) and (2) of section 184 are fulfilled by the declarant. Applicability of certain provisions of Income-tax Act and of Chapter V of Wealth-tax Act 192. The provisions of Chapter XV of the Income-tax Act relating to liability in special cases and of section 189 of that Act or the provisions of Chapter V of the Wealth-tax Act, 1957 (27 of 1957) relating to liability in respect of assessment in special cases .....

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ntion, being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board; or (ii) such order of detention, being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9, or on the report .....

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s not been set aside by a court of competent jurisdiction; (b) in relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code (45 of 1860), the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985), the Unlawful Activities (Prevention) Act, 1967 (37 of 1967) and the Prevention of Corruption Act, 1988 (49 of 1988); (c) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) .....

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section 148 or section 153A or section 153C of the Income-tax Act has been issued in respect of such assessment year and the proceeding is pending before the Assessing Officer; or (ii) where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act in a previous year and a notice under sub-section (2) of section 143 for the assessment year relevant to such previous year or a notice unde .....

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declared that- (a) save as otherwise expressly provided in sub-section (1) of section 180, nothing contained in this Scheme shall be construed as conferring any benefit, concession or immunity on any person other than the person making the declaration under this Scheme; (b) where any declaration has been made under section 180 but no tax, surcharge and penalty referred to in section 181 and section 182 has been paid within the time specified under section 184, the undisclosed income shall be ch .....

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