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Clarifications on the Income Declaration Scheme, 2016

Income Tax - 29/2016 - Dated:- 18-8-2016 - Circular No.29 of 2016 F.No.142/8/2016-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division) Dated 18th day of August, 2016 The Income Declaration Scheme, 2016 (hereinafter referred to as the Scheme ) came into effect on 1st June, 2016. To address doubts and concerns raised by the stakeholders, the Board has issued three sets of FAQs vide Circular Nos. 17, 24, 25 & 27 of 2016. In order to addr .....

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d in the audited balance sheet but are fictitious in nature, and such liabilities cannot be directly linked to acquisition of a particular asset in the balance sheet, then such fictitious liabilities can be disclosed under the Scheme as such without linking the same with the investment in any specific asset. However, in cases where there is a direct link between the fictitious liability and the asset acquired then the amount to be declared shall be the fair market value of the acquired asset as .....

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me is declared under the Scheme, the income declared for an earlier assessment year can be taken into account to explain the transactions provided there is a nexus between the income declared and the transactions of the subsequent assessment year. Question No.3: Whether the valuation report of assets declared under the Scheme shall be called for by the department for any enquiry at any time? Answer: The valuation report from a registered valuer shall not be questioned by the department. However, .....

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or short term? Answer: The issue was earlier considered and it was clarified vide Circular No.17 dated 20.05.2016 that in such cases period of holding shall be deemed to begin from 01.06.2016 as the asset has been revalued on such date. However, considering the representation received from various stakeholders and the fact that this may lead to complications in calculation of capital gain at the time of sale of asset which was partly funded from undisclosed income now declared under the Scheme, .....

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s fair market value of the same as on 01.06.2016 under the Scheme at ₹ 20 lakh. If the said house is sold on 01.10.2017 for ₹ 30 lakh, the holding period for the house for purposes of computation of capital gain shall be six years i.e. from 01.10.2011 to 01.10.2017. As the holding period exceeds three years, the gains arising from such transfer shall be treated as long term capital gain. Further, the indexation benefit in this case shall be available on ₹ 20 lakh from 01.06.201 .....

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. With regard to the remaining part the fair market value of the property shall be determined based on the provisions of rule 3(1)(d) of the Rules without taking into effect the proviso to the said rule. The said situation is illustrated as below:- Suppose, Mr. X purchased a piece of land in year 2004-05 for ₹ 10 lakh, however the stamp duty value was ₹ 15 lakh. Thereafter, in the period 2005-06 to 2007-08, Mr. X constructed a two storeyed house on the said land. The amount to be dec .....

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immovable property on the basis of Income Declaration Scheme Rules, 2016 prior to their amendment vide the Income Declaration Scheme (Third Amendment) Rule notified vide CBDT Notification No. 74 dated 17.8.2016. In such a case whether the declarant can revise the declaration based on such amended rules? Answer: Yes, the declarant can revise the fair market value of immovable property declared in the declaration already filed on account of the amended provisions of the Income Declaration Scheme R .....

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quested to instruct the banks to allow deposit of cash over the counter in accordance with its existing master circular No. DBOD No.Leg.BC.21/09.07.006/2014-15 dated 01.07.2014. Question No.8: Whether the information of cash deposits made in bank as a consequent to declaration made under the Scheme shall be picked up by FIU or reported to the income-tax department? Answer: It is clarified that no adverse action shall be taken against the declarant by FIU or the income-tax department solely on th .....

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