Income Declaration Scheme extended to September 2017

The Centre has announced an extension of a deadline under the Income Declaration Scheme, aimed at bringing undeclared income and assets into the tax net to, September 30, 2017.

Details:

The government has also decided to stagger the due dates for the payments. 

• According to the new plan, a minimum of 25% of the tax, surcharge and penalty is to be paid by November 30, 2016, another 25% by March 31, 2017, and the remaining amount by September 30, 2017. 
• The previous deadline for the entire payment of the tax, interest, and penalty was November 30, 2016.
• The government also clarified about a pending issue on whether the tax, surcharge and penalty could be paid with undisclosed income not included in the amount that was originally declared, effectively reducing the rate payable from 45% to 31%. 
• If a person declared Rs.100 lakh as undisclosed income under the scheme, then he would have to pay a total of Rs.45 lakh as tax, surcharge and penalty. 
• In case this is paid from other undisclosed income, then “the declarant will not get any immunity under the Scheme.”

Background:

The Income Declaration Scheme offers people with undisclosed income to declare it by paying a penal tax rate of 45% on such income. An amendment in this regard was also recently moved in the Finance Bill, 2016. 

• The Finance Bill has imported Section 138 of the Income Tax Act into the declaration scheme’s ambit. 
• Bringing in Section 138 to the Scheme brings in objectivity on confidentiality of income tax information and the limitations thereof.