It is proposed to insert a new chapter to The Income Tax Act, 1961 with the intention of providing a chance to persons who have undisclosed income, to voluntarily come forward, disclose the income, pay prescribed taxes with applicable penalties and get relieved
The Scheme shall be effective from 01.06.2016 upto the date notified by the Central Government.
Applicability of Scheme
Undisclosed income of any financial year upto AY 2016-17
PROPOSALS OF THE SCHEME
Tax, surcharge and penalty, as envisaged in the Scheme, shall be paid on or before the date notified by the Central Government. Failure to make such payment shall render declaration void under this Scheme.
Declaration made under the Scheme by misrepresentation or suppression of facts, shall be consider as void
Tax and Penalty
The extent of tax and penalty proposed is tabulated below:
| Levy | Rate | Effective Tax on Income |
| Tax | 30% | 30% |
| Surcharge (Krishi Kalyan Cess) | 25% of 30% | 7.50% |
| Penalty | 25% of 30% | 7.50% |
| Total | 45% |
Benefits of this Scheme shall not be available to any person other than the person who has given the declaration
If an assessee has declared income under this Scheme, however, has not pay the relevant tax and penalty, the undisclosed income shall be chargeable to tax in the year of declaration
In case any income has been accrued or arisen or received or any asset has been acquired out of such income prior to commencement of this Scheme and further such income has not been declared pursuant to this Scheme, such income shall be deemed to have been accrued, arisen or received or such asset shall be deemed to have been acquired in the year in which notice under Section 142, 143 (2), Section 148, Section 153A or Section 153C is issued and relevant provisions shall apply accordingly. This is explained with the help of a simple example:
Let us assume this Scheme is open from 01.06.2016 to 31.03.2018.
Undisclosed income pertaining to the year 2013 is Rs.1 crore and the same has not been declared by assessee.
Suppose a scrutiny notice under Section 143(2) has been received on 01.06.2017 by the assessee, then the relevant provisions of Income Tax shall apply for A Y 2018-19 and the assessee cannot take shelter under this Scheme for that year.
CASES NOT ELIGIBLE FOR THE SCHEME
– Where notice is issued u/s.142(1), 143(2), 148, 153A, 153C, or
– Where search or survey has been conducted and time period for issue of notice has not been expired, or
– Where information is received under an agreement with foreign countries regarding such undisclosed income, or
– Cases covered under The Black Money Act, 2015, or
– Persons notified under The Special Court Act, 1992, or
– Cases covered under Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988.
BENEFITS OF DECLARATION
-Declarations made under this Scheme shall be exempt from wealth tax in respect of assets declared
– No scrutiny and enquiry under The Income Tax Act and The Wealth Tax Act
– Immunity from prosecutions under The Income Tax Act and The Wealth Tax Act
– Immunity from The Benami Transactions (Prohibition) Act, 1988 if the asset in the name of the Benamidar is transferred to the assessee or his legal representative within the tenure specified by the Central Government.
MEASURES FOR SMOOTH WORKING OF SCHEME
It is proposed that in case any practical difficulty is observed in working of Scheme, the Central Government may, by an order, remove such difficulty, although not after 2 years from the date of applicability of this Scheme and such order shall be laid down before each House of Parliament
The Central Board of Direct Taxes (CBDT) shall, under the direction of the Central Government, be empowered to make rules under this Scheme and such rules shall be laid down before each House of Parliament
