Tax department declares Income Declaration Scheme 2016

Tax department has declared ‘Income Declaration Scheme (IDS) 2016’ for those people who want to disclose their unaccounted income or assets. The scheme gives an opportunity to tax evaders to come out clean by paying the applicable tax, cess and penalty totaling 45% of the undisclosed income. This will help them regularise their wealth.

I-T department stated that the tax authorities will not question the valuation reports of the accredited valuers, clearing more doubts about the four-month long scheme. The government has requested the Reserve Bank of India to issue instructions to banks to allow over the counter payment of tax under the scheme in cash. The window under the IDS 2016 opened on June 1 and will close on September 30. Therefore department has said that people should make use of this opportunity.

The department further said that income declared under the scheme for a particular assessment year can be taken into account to explain the transactions in the subsequent assessment years, helping assesses avoid multiple taxes on the same income once the declaration is made. However, a nexus between the income declared and the transactions of the subsequent assessment year will have to be established.

It added that in cases where fictitious loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance, these can also be declared under the scheme even if they are not linked to investment in any specific asset. However, in cases where there is a direct link between the fictitious liability and the asset acquired then the amount to be declared shall be the fair market value of the acquired asset as on June 1, 2016.