Vide Finance Act, 2016, the Government inserted Chapter-IX providing for Income Declaration Scheme’2016 (‘the Scheme’). By using technology and requiring PAN disclosures for a range of transactions, the Income tax Department is tightening the net on the generation of black money at source. While the Income Disclosure Scheme last year sought to tackle black money stashed overseas, this year’s Scheme is, however, limited to domestic income that has remained untaxed. It is unlikely that similar scheme would again be launched in near future. It is, therefore, imperative to diligently and carefully avail the benefit of compliance window

Following are the salient features of the above Scheme:

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  • Undisclosed income declared shall not be included in the total income for any assessment years;
  • Undisclosed income declared will not affect the finality of the completed assessments.
  • Complete secrecy of the information furnished by the declarant will be maintained by the Department and the same shall not be admissible as evidence in any other proceedings under the Income tax Act.

CBDT has clarified that the information contained in the declaration shall neither be shared with any other law enforcement nor within the Income tax department for any further investigation;

  • CBDT has clarified that the department will not make any enquiry about the sources of income, payment of tax, surcharge and penalty.
  • Undisclosed income under a valid declaration shall be:
  1. exempted from levy of Wealth tax; and
  2. immune from the provisions of Benami Transactions (Prohibition) Act,1988.
  • In certain cases, depending on the facts and circumstances, the effective tax rate may, as per our understanding, work out to 31% only or even lesser than that.
  • Tax shall be payable at the FMV determined in accordance with the prescribed valuation rules, which may be lower than the stamp duty valuation.