Income Declaration Scheme, 2016 - By CA Kirti Kumar Joshi

History of measures taken by Government to curb Black Money Demonetization of High denomination notes in 1946 and 1978. Voluntary Disclosure Income Scheme in 1951, 1965, 1975. Last Voluntary Disclosure of Income Scheme in 1997 Amendments made in Prevention of Money Laundering Act, 2002. Black Money Act - Undisclosed Foreign Income and Assets Scheme, 2015

Income Declaration Scheme,2016 (Chapter IX of the Finance Act, 2016) Features A new scheme has been designed to declare any ‘undisclosed income’ vide the Finance Bill, 2016 for persons who have not paid full taxes in the past. The scheme provides for declaration by any person of his undisclosed income by paying tax, surcharge and penalty on such declared income. Thus through announcing this scheme, Government has provided one more opportunity to permit the non-filers, stop filers and persons with unaccounted income/investments

Scope Applicable to Residents as well as Non-residents To declare Undisclosed Income Undisclosed Assets

Provisions of the scheme Scheme started on 1st June 2016 Ends on 30th September 2016 First Installment of tax 25% - 30th November 2016 Second Installment of tax 25% - 31st March 2017 Final Installment 50% - 30th September 2017

Rate of Tax 45%

Eligible Period Disclosure of Undisclosed Income upto F.Y. 2015- 16 Except years pending u/s 142, 143(2), 148, 153A/C on 31.05.2016 If a notice (other than Survey and Search) is issued on or after 01.06.2016, the person is still ELIGIBLE to declare

Income not Disclosed in Return Income Escaped Assessment Persons Eligible No Return Case Income not Disclosed in Return Income Escaped Assessment

Opportunity Cases detected under NMS (Non Filer Monitoring System) No return filed Persons covered under AIR Reporting Immovable property sale/ purchase Unaccounted cash transactions Bogus Long term capital gains Undisclosed FDR’s – TDS Credit available

Disqualified Persons under Scheme Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 Special Court (Trial of offences relating to Transaction in Securities) Act,1992 Indian Penal Code The Narcotic Drugs and Psychotropic Substance Act ,1985 The unlawful Activities (Prevention) Act,1967 The prevention of Corruption Act,1988 The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974

Valuation of Undisclosed Asset (Rule 3) Higher of Cost or Fair Market Value as on 01.06.2016 Except Immovable Property in which indexation benefit available

What can be Declared Immovable Property, Bullion, Jewellery , Archeological Collections, work of art etc. Interest of a person in a Partnership firm/ AOP/ LLP Shares and Securities : A. Listed on Recognized Stock Exchange B. Unquoted Shares and Securities Any other Asset - Stock in Trade, Interior Decorations, etc. Bogus/ accomodation entries, undisclosed loans and advances. All India list of registered valuers of different classes of assets notified.

Exemptions/Immunities Not be included in the Total Income Not to affect finality of completed assessments ; Immunity from prosecution ; Exemption from wealth tax Immunity from the Benami Law

CAUTION If tax not paid then income will be taxed in respective year as per regular Income Tax provisions Not entitled to reopen any assessment or claim any setoffs or relief No deduction against such declared income. Declaration Void if made by misrepresentation or suppression of facts No benefit or immunity to Person other than declarant

SPECIAL POWERS - 197(c) Where no declaration is made of any undisclosed income of earlier period then the same will be deemed as income earned in the year in which a notice under section 142, 143(2), 148, 153A or 153C issued by the AO. It seems the limitation of six year period for reopening assessment under section 148 will not help assessee’s.

How to file Declaration Electronically under digital signature Electronically through EVC In Print Form

How to make Declaration Form 1 Declaration of Income and Assets u/s 183 Form 2 Acknowledgement within 15 days Form 3 Proof of payment filed by declarant to CIT Form 4 Certificate issued by CIT for Income Declaration

What to do with BLACK MONEY….??? Reporting of high value transactions (AIR) Non filer Monitoring (NMS) PAN based GST TCS 1% on cash purchases above Rs.2 Lakhs (S.206) Reporting of Cash sales over 2 Lakhs in AIR by Audit Assessee Project INSIGHT - Data Mining, Web Mining, Data Analytics

फेसबुक पर रईसी दिखाने पर आयकर का नोटिस फेसबुक पर रईसी दिखाने पर आयकर का नोटिस पिछले कुछ सालों में सोशल मीडिया लोगों के लिए अपनी रईसी दिखाने का नया माध्यम बन चुका है। विदेशों में घूमने-फिरने की फोटो, होटलों में पार्टी करते हुए फोटो, महंगी कारजैसे फोटो अपलोड किए जाते हैं। विभागीय सूत्रों ने बताया कि पिछले माह 20 लोगों को नोटिस भेज जवाब मांगा गया है। ये भी इसी तरह की लगातार पोस्ट के कारण विभाग की नजरों में आए। इनके रिटर्न देख आगे की कार्रवाई की जाएगी। वहीं इस समय आय के हर स्रोत पर गौर किया जा रहा है। naidunia.jagran.com

BENAMI TRANSACTION (PROHIBITION) ACT AMENDED

Definition of benami transactions widened, The Benami Transactions (Prohibition) Amendment Bill, 2015 (Passed by Both houses) Definition of benami transactions widened, Establishing Executing authorities Stringent Penalty and Prosecution

Scope Original Definition of BENAMI TRANSACTION a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person. Now includes transactions where the transaction is made in a fictitious name, the owner is not aware of / denies knowledge of the ownership of the property, the person providing the consideration for the property is not traceable.

Authorities under Benami Law Initiating Officer Approving Authority Adjudicating Authority Administrator Appellate Tribunal

PENAL PROVISIONS Penalty for entering into benami transactions Rigorous Imprisonment of 1 to 7 years, AND fine upto 25% of the FMV of the benami property. Confiscation of benami property Penalty for providing false information Rigorous Imprisonment of 6 month to 5 years Fine upto 10% of the FMV of the benami property.

IDS - What's on the mind of taxpayer High tax rate of 45% and liquidity issue May be offered in current years income Should not bother about income/ assets beyond six years Government may announce another scheme Waiting for others to take action first Status quo after closure of the scheme

Confidentiality Information will not be shared with other agencies & even AO Secrecy Clause

Golden Last Chance 26.06.16 Man ki baat – We lose our peace by violating rules, why not give correct information about our income and assets to Govt 23.07.16 Reminder – I urge you to ask everyone associated with your industry to declare assets as such (tax evasion) things are more common in this industry. Why should we fear the government or income tax officers? Its better that one declares their assets before September 30

After the Scheme ends……..

Thank You