The Income Declaration Scheme 2016

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Business Mantra: Faridabad

The Budget presented on 29 February 2016 for A.Y. 2017-18 proposed a scheme for domestic taxpayers to disclose their undeclared (unaccounted) income of previous years. The proposed scheme is given the name of The Income Declaration Scheme 2016 (TIDS-2016) and also popularly known as ‘Fair & lovely Scheme’ as termed by Sh. Rahul Gandhi (Vice President, Indian National Congress).

This scheme provides an opportunity to all those who have not properly revealed their assets or income earlier to come forward and pay the full taxes, surcharge and penalty. And the penalties are less as compared to those of Sec. 234A, 234B, 234C, 220, 221, 272 among others. This scheme will be in force for a period of 4 months starting from 1st June 2016 till 30th September 2016.

The assesse can disclose the incomes in the form of investments in assets or the income related to Financial Year 2015-16 or previous years as well. It will not override the Black Money Act 2015 but may override the rate or rates specified under the provisions of Income Tax Act or the annual Finance acts. Also Income tax return u/s 139 of previous years could be filed under this scheme.

  • What will be the value of the undisclosed income in the form of an undisclosed asset?

The fair market value of such asset as on 1st June 2016 shall be deemed to be the undisclosed income under the scheme.

  • Can expenses be claimed?

No expenses, deductions or allowances could be claimed by the assesse.

  • What will be the tax rate under TIDS-2016?

Tax rate of 45% is applicableas follows:-

Slab Rate of 30% despite the level of income+ 25% krishi kalyan cess on the tax i.e. 7.5%+ 25%penalty on the tax evaded i.e. 7.5%.

And the last date to pay the tax, surcharge and penalty is 30th November 2016. If the assesse fails to pay the tax before due date the declaration will be void.

  • Who all have to file the declaration?

Persons who have to file the declaration

SI. Declarant To be signed by
1 Individual Individual in case absent from India the person authorised by him.
2 HUF Karta in exceptional cases the adult member of HUF
3 Company Managing Director
4 Firm Managing partner
5 Any Other Association Any other member of the association or the Principal Officer
6 Any Other Person That person or any other person competent to act in his behalf.

The declaration can be filed online on the e-filing website of the Income-tax department but only once. The penalties and taxes paid under this scheme are not refundable.

  • Effects of valid declaration:-
  • The amount of undisclosed income shall not be included in the total income of the declarant under the Income- Tax act of any assessment year.
  • The contents shall not be admissible in evidence against the declarant in any penalty or prosecutions under the Income Tax Act and the Wealth Tax Act.
  • The value of the asset declared in the declaration shall not be chargeable to Wealth- tax for any assessment year.
  • Subject to provisions of section-187, immunity from provisions of benami transactions(prohibition) Act, 1988 will also be available to valid declarants.
  • The provisions of this scheme will not be applicable-
    • If the decleration is made by suppression or misrepresentation of facts.
    • If the declerant is detained in Conservation of Foreign Exchange & Prevention of smuggling Activities Act,1974.
    • If the applicant is prosecuted for any offence under Cahpter IX or Chapter XVII of Indian Panel Code.
    • If the applicant is notified under section 3 of Special Court Act, 1992.
    • In relation to any undisclosed foreign income & asset which is chargeable to tax under the Black Money & Imposition of Tax Act, 2015.
    • Where notice u/s 142, 143(2), 148, 153A or 153C of The Income Tax Act, 1961.
    • Where search has been conducted u/s 132 or requisition u/s 132A or survey has been conducted u/s 133A of the The Income Tax Act, 1961.

This initiative of Government is a step in inviting the evaders and fulfilling the election manifesto of BJP Government regarding black money disclosure but the taxpayers are not guaranteed about the use of information by the government. Also lets hope it should not turn a flop show like the last years scheme regarding foreign assets.

Looking forward that this scheme will pave a way for extinguishment of two parallel economies running in the country.


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