Under the Income Declaration Scheme 2016, there is an amnesty-like one time disclosure window which will enable black money holders to come clean by declaring their ill-gotten wealth by paying a tax and penalty of 45%. This scheme launched by the NDA Government, started on 1st June, 2016 and will continue up to 30th September. The penalty, tax and surcharge rate of 45% is as follows-
The income declared will be taxed at the rate of 30% plus a ‘Krishi Kalyan Cess’ of 25% on the taxes payable and a penalty at the rate of 25% of the taxes payable, amounting to 45% of the income declared under the scheme.
Hoarders of black money will be able to make such declarations till September 30 and the taxes, surcharge and penalty should be paid by November 30. The declarations can either be made online on the official e-filing website of the Income Tax department or before the various regional Principal Commissioners of I-T. Additionally, such declaration will not be used against the persons under the Income-Tax Act or Wealth Tax (now abolished). There will also be immunity from Benami Transactions (Prohibition) Act. A circular issued by Ministry of Finance also stated that such declarant will be liable for capital gains tax on the sale of such assets in future.
As per the scheme, a person cannot declare undisclosed income which has been acquired from money earned through corruption. The scheme will not apply in relation to the prosecution of any offence punishable under the Prevention of Corruption Act, 1988, the Ministry of Finance has said. If the declarant fails to pay the entire amount of tax, surcharge and penalty within the specified date (November 2016) the declaration will be considered as void. If that happens, the provisions of the Income-Tax Act will apply in respect of such income as they apply in relation to any other undisclosed income.
During a press conference in June, Mr. Arun Jaitley, Minister of Finance said that all declarations under the scheme will be confidential.