Vide Finance Act, 2016, the Government inserted Chapter-IX
providing for Income Declaration Scheme'2016 ('the
Scheme'). By using technology and requiring PAN disclosures for
a range of transactions, the Income tax Department is tightening
the net on the generation of black money at source. While the
Income Disclosure Scheme last year sought to tackle black money
stashed overseas, this year's Scheme is, however, limited to
domestic income that has remained untaxed. It is unlikely that
similar scheme would again be launched in near future. It is,
therefore, imperative to diligently and carefully avail the benefit
of compliance window
Following are the salient features of the above Scheme:
Chapter-IX of the Finance Act, 2016 (section 181 to 199)
3 Circulars issued in the form of FAQs
Notified Forms 1 to 4.
What can be
Any undisclosed asset in the form of movable/immovable
property; cash, jewellery etc.
Any person (whether resident or non-resident) having not
declared income in the years prior to the assessment year 2017-18
except certain cases specifically excluded under section 196.
Valuation/computation of undisclosed income
The Fair Market Value ('FMV') of the undisclosed asset
as on 1st June'2016 shall be deemed as undisclosed
CBDT has further laid down valuation rules for determining the fair
market value of the undisclosed asset (refer Rule-3).
The Scheme is available from June 1, 2016 till September 30,
rate and timeline
45% of the undisclosed income (without deduction of any
expenditure/set off of losses)
To be paid on or before November 30, 2016
Above is subject to credit of taxes deducted, if any.
BENEFITS OF THE SCHEME:
Undisclosed income declared shall not
be included in the total income for any assessment years;
Undisclosed income declared will not
affect the finality of the completed assessments.
Department and the same shall not be
admissible as evidence in any other proceedings under the Income
CBDT has clarified that the information contained in the
declaration shall neither be shared with any other law enforcement
nor within the Income tax department for any further
CBDT has clarified that the
department will not make any enquiry about the sources of income,
payment of tax, surcharge and penalty.
Undisclosed income under a valid
declaration shall be:
exempted from levy of Wealth tax;
immune from the provisions of Benami
Transactions (Prohibition) Act,1988.
In certain cases, depending on the
facts and circumstances, the effective tax rate may, as per our
understanding, work out to 31% only or even lesser than that.
Tax shall be payable at the FMV
determined in accordance with the prescribed valuation rules, which
may be lower than the stamp duty valuation. We will keep you
updated on further developments on the subject matter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist professional advice should
be sought about your specific circumstances. The views expressed in
this article are solely of the authors of this article.
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Cummins Inc. is a foreign company, rendering services in respect of desktop/laptop software license and internet mail facilities to its Indian associated enterprises, i.e. CIL and CSSL which were paying IT charges provided by the taxpayer.
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