Who? What? How for the income declaration scheme, 2016

SNO

QUESTION

SOLUTION

1

Who Is Eligible For This Scheme

1.The Person Who Has Not Received Any Notice Under Section 142(1)/143(2)/148/153a/153c For That Assessment Years Will Only Be Eligible For Declaration.

2.No Proceeding For That Assessment Years Is Pending Before The Assessing Officer.

2

What Are the effective dates for this scheme

1.effective from 1st june 2016

2.ends on 30th sep 2016

3.Tax,surcharge & Penalty to be paid upto 30th Nov 2016.

3

How will the Price of  disclosed Income Calculated.

The Asset which any one wants to disclose, the price of that asset will be calculated as fair market value as on 01/06/2016.

Suppose I want to disclose my undisclosed asset which I purchased in 2000-01 at a price of 1,00,000 then The Price of asset will not be 1,00,000,the fair market value of that asset on 01/06/2016 will be considered the actual price of that asset.

4

Who will calculate The Fair market Value Of Asset

The Income Tax Department Has uploaded the List Of IT Approved valuers for agriculture land/Immovable Asset/WT etc.

5

What Formulae will They adopt for calculating Fair Market value Of An asset

It will be computed U/S 43 CA and 50C

6

How much tax will be paid for disclosing assets under this scheme

Flat 45% Of The Disclosed Income(Fair market value of that Disclosed Income)as on 01/06/2016 Comprising Of

Tax :- 30%  Of The Income disclosed(F.M.V as on 01/06/2016).

Surcharge (Krishi Kalyan Cess):-7.5%  Of The Income disclosed(F.M.V as on 01/06/2016).

Penalty:-7.5% Of The income Disclose(F.M.V as on 01/06/2016).

Please Do Not Get Confused It is 45% Flat.

Some people has asked me question that 30% of Undisclosed Income + 7.5% Of 30%Of undisclosed income +7.5% Of Total Of 30%Of undisclosed income and 7.5% Of 30%Of undisclosed income.

***Remember If 100000 is the disclosed Income  then 45000 is the Total tax(Including 30%+7.5%+7.5%)  and

                                    Not

30000+2250(7.5%of 30000)+2418.75(7.5% Of 32250) = 34668.75

7

Where An Undisclosed Income In The Form Of Investment In Asset Is Declared Under The Scheme And Tax, Surcharge And Penalty Is Paid On The Fair Market Value Of The Asset As On 01.06.2016, Then Will The Declarant Be Liable For Capital Gains On Sale Of Such Asset In The Future? If Yes, Then How Will The Capital Gains In Such Case Be Computed?

Yes, The Declarant Will Be Liable For Capital Gains Under The Income-Tax Act On Sale Of Such Asset In Future. As Per The Current Provisions Of The Income-Tax Act, The Capital Gains Is Computed By Deducting Cost Of Acquisition From The Sale Price.

In This Case, Since The Asset Will Be Taxed At Its Fair Market Value The Cost Of Acquisition For The Purpose Of Capital Gains Shall Be The Fair Market Value As On 01.06.2016 And The Period Of Holding Shall Start From The Said Date (I.E. The Date Of Determination Of Fair Market Value For The Purposes Of The Scheme).

8

 If The Notice Under Section 142, 143(2), 148, 153A Or 153C Of The Income-Tax Act Has Been Issued But Not Served On The Declarant Then How Will He Come To Know Whether The Notice Has Been Issued?

The Declarant Will Not Be Eligible For Declaration Under The Scheme Where The Undisclosed Income Relates To The Assessment Year Where A Notice Under Section 142, 143(2), 148, 153A Or 153C Of The Income-Tax Act Has Been Issued And Served On The Declarant On Or Before 31st Day Of May, 2016. The Declarant Is Required To File A Declaration Regarding Receipt Of Any Such Notice In Form-1                     

9

In A Case Where The Undisclosed Income Is Represented In The Form Of Investment In Asset And Such Asset Is Partly From Income That Has Been Assessed To Tax Earlier, Then What Shall Be The Method Of Computation Of Undisclosed Income Represented By Such Undisclosed Asset For The Purposes Of The Scheme?

This Is Illustrated By An Example As Under:

Investment In Acquisition Of Asset In Previous Year 2013-14 Is Of Rs.500 Out Of Which Rs.200 Relates To Income Assessed To Tax In A.Y. 2012-13 And Rs.300 Is From Undisclosed Income Pertaining To Previous Year 2013-14. The Fair Market Value Of The Asset As On 01.06.2016 Is Rs.1500.

The Undisclosed Income Represented By This Asset Under The Scheme Shall Be:

1500-(1500 * 200/500)=1500-600= Rs.900

10

Can A Person Against Whom A Search/ Survey Operation Has Been Initiated File Declaration Under The Scheme?

NO? The Person Is, However, Eligible To Make A Declaration In Respect Of An Undisclosed Income Of Any Other Previous Year In Which The Search/Survey Has Been Conducted.

11

Can A Person Declare Under The Scheme His Undisclosed Income Which Has Been Acquired From Money Earned Through Corruption? (*** FOR GOVT EMPLOYEES)

NO? As Per Section 196(B) Of The Finance Act, 2016, The Scheme Shall Not Apply, Inter-Alia, In Relation To Prosecution Of Any Offence Punishable Under The Prevention Of Corruption Act, 1988. Therefore, Declaration Of Such Undisclosed Income Cannot Be Made Under The Scheme. However, If Such A Declaration Is Made And In An Event It Is Found That The Income Represented Money Earned Through Corruption It Would Amount To Misrepresentation Of Facts And The Declaration Shall Be Void Under Section 193 Of The Finance Act, 2016. If A Declaration Is Held As Void, The Provisions Of The Income-Tax Act Shall Apply In Respect Of Such Income As They Apply In Relation To Any Other Undisclosed Income.