The Finance Minister Mr Arun Jaitley has pulled up an opportunity to curb the black money and brings them in the books by declaring the Income Declaration Scheme 2016.

The Scheme intends to provide an opportunity to the persons who have not paid taxes to come forward and declare the undisclosed income and pay tax, surcharge and penalty totalling in all the 45% of such undisclosed income declared.

Scope of the Scheme

The aforesaid scheme is applicable in two cases. First being such income for which the declarant had failed to furnish a return under section 139 of IT Act for any assessment year prior to the assessment year FY-2017-18. Second being he/she has failed to disclose the income before the date of commencement of Income Declaration Scheme. As on June, 1st 2016 the fair market value of such assets is computed in accordance with Rule 3 of the Income Declarations Scheme Rules, 2016.

Eligibility

The person as defined as per the provision of Income Tax Act is eligible to file for the declaration. Further, the person includes an individual, Hindu Undivided Family (HUF), a Company, a Firm, AOPs and BOIs.

Time Limit for declaration and Payment

As per the aforesaid Scheme the declaration can be made anytime on or after June, 1^st 2016. However before the said date it should be notified by the Central Government. Further notified by CG that on September, 30^th 2016 is the due date for making the declaration in Form 1 and November, 30^th 2016 as the last date by which the tax, surcharge and penalty shall be paid.

While the declaration is furnished, in Form-1 the jurisdictional Principal CIT will issue an acknowledgment in Form-2 to the declarant within 15 days from the end of the month in which the declaration is furnished. Further, the declarant will be eligible to furnish proof of payment made in respect of tax, surcharge and penalty to the jurisdictional  Principal CIT in the prescribed Form-3 post this the said authorities will issue a Certificate in Form-4.

The Scheme is not eligible in certain cases

As per the aforesaid Scheme, no declaration can be made in respect of any undisclosed income chargeable to tax under the Income Tax Act for assessment year 2016-17 or earlier assessment for the following cases enlisted here below:-

1. When a notice under Section 142 or 143(2) or 148 or section 153A or section 153C of Income Tax Act has been issued in respect to the assessment year and the proceeding is pending before the Assessing officer (AO). Further, it is to clarify that the person will not be eligible under the aforesaid Scheme if any notice referred above has been served on or before May, 31st 2016.
2. The cases which is covered under the Money laundering an Imposition of Tax Act, 2015.
3. An individual in respect to whom proceedings for prosecution of any offence punishable under Chapter XVII (offences against property) or Narcotics Drugs and Psychotropic Substances Act or the Prevention of Corruption Act which are still pending shall not be eligible to make declaration under the scheme.
4. An individual who is notified under Section 3 of Special Court (Trial Offences Relating to Transactions in Securities) Act or a person, in respect of whom an order of detention, shall not be eligible for making a declaration under the Scheme.

Effects of favourable Declaration

When a valid declaration is furnished before the said authority, the following consequences will follow:-

1. As per Income Act, the undisclosed income shall not form part of the total income of the declarant for any assessment year.
2. The value of asset declared in the declaration shall not be chargeable to Wealth-Tax for any assessment year.

Manner of Declaration

As per the aforesaid Scheme, declaration is to made in a such a prescribed manner. The prescribed form for this purpose is Form-1. Here below mentions the individual who are authorized to sign the forms.

1. Individual– Individual; where the individual is absent from India, person authorized by him; where the individual who is mentally incapable, his guardian or other person competent to act on his behalf.
2. HUF– Karta; where the Karta is absent from India or by any other adult member of the HUF.
3. Company– Managing Director; where due to some reason the managing director is not able to sign the declaration, by any partner, not being a minor or mentally incapable. 
4. Firm– Managing Partner; where due to some reason the managing director is not able to sign the declaration, by any partner, not being a minor or mentally incapable.

Confidentiality

The information in respect to the declaration made by the declarant is keep confidential as the income of return of income filed by the assessees.

The Indian Government have brought in such an effective Scheme to curb the black money from the country. Further, the Scheme is operative from June, 1st 2016.

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