A

Seminar Report
On

INCOME DECLARATION SCHEME 2016

Submitted in partial fulfillment for the

Award of degree of
Master of Business Administration (2016-2017)

Faculty of Commerce &Management Studies

Lachoo Memorial College of Science and Technology

(Autonomous)

Submitted to Submitted by-

Dr.Rashmi Mathur RAGHAV MUNDRA

Asst.Professor

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 ACKNOWLEDGEMENT

I would like to thank respected Dr.Rashmi Mathur for giving me

such a wonderful opportunity to expand my knowledge for my
own branch and giving me guidelines to present a seminar report.
It helped me a lot to realize of what we study for.
Secondly, I would like to thank my parents who patiently helped
me as I went through my work and helped to modify and
eliminate some of the irrelevant or un-necessary stuff.
Thirdly, I would like to thank my friends who helped me to make
my work more organized and well-stacked till the end.
Next, I would like to thank Microsoft for developing such a
wonderful tool like MS Word. It helped my work a lot to remain
error-free.
Last but Clearly not the least; I would thank Almighty for giving
me strength to complete my report on time.

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 ABSTRACT
Black money, since the colonial times, has been the elephant in the room: it is
everywhere and yet rarely talked about. In recent years, however, the middle
class has become more strident in demanding action and it has led to a couple of
large-scale public agitations. In Narendra Modi’s election campaign, too,
recovering black money was a much-talked about promise. Closer to the mid-
point of its term, the government has attempted to combat the underground
economy with the Income Declaration Scheme (IDS), first announced in the
budget 2016. The IDS, closing on September 30, is different from the previous
schemes targeting black money in one crucial aspect: it is not an amnesty
scheme but the central board of direct taxes (CBDT) is going to levy a total tax
of 45 percent including 30 percent tax, 7.5 percent penalty fee and 7.5 percent
surcharge. This means that if someone discloses unaccounted income or assets
worth Rs 1 crore, Rs 45 lakh – close to half of it – would directly go to the
government’s kitty, while the rest would turn into ‘white’. In the past, the
maximum tax that the government charged on black income disclosure did not
exceed 15 percent. –

Among the incentives under the IDS, no prosecution will be launched under the
Benami Transactions (Prohibition) Act, 1988, the Income Tax Act or the
Wealth Tax Act in respect of the assets declared. Declaration made under the
scheme will not be admissible as evidence against the declarant under any other
legal proceedings. However, no immunity is provided under the Foreign
Exchange Management Act, Money Laundering Act, Indian Penal Code,
Central Excise Act, Customs Act, service tax provisions, VAT provisions or
other Acts.

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 CONTENT

o Introduction
o Key features of scheme
o Scope and coverage of scheme
o Tax rate, penalty and surcharge under
the scheme
o Effective dates of scheme
o Benefits/Effects of declaration under
the scheme
o When scheme does not apply
o When declaration be void
o Forms to be filed
o Results

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 INTRODUCTION
THE INCOME DECLARATION SCHEME, 2016 Why is the Income
Declaration Scheme introduced? (Relevant extract from the Finance Minister’s
Budget Speech, 2016) CLEARING THE AIR: We are moving towards a lower
tax regime with non-litigious approach. Thus, while compliant taxpayers can
expect a supportive interface with the department, tax evasion will be countered
strongly. Capability of the tax department to detect tax evasion has improved
because of enhanced access to information and availability of technology driven
analytical tools to process such information. I want to give an opportunity to the
earlier non-compliant to move to the category of compliant. LAST CHANCE
FOR THE BLACK MONEY HOLDERS TO COME CLEAN: I propose a
limited period Compliance Window for DOMESTIC TAXPAYERS to declare
undisclosed income or income represented in the form of any asset and clear up
their past tax transgressions by paying tax at 30%, and surcharge at 7.5% and
penalty at 7.5%, which is a total of 45% of the undisclosed income. There will
be no scrutiny or enquiry regarding income declared in these declarations under
the Income Tax Act or the Wealth Tax Act and the declarants will have
immunity from prosecution. Immunity from Benami Transaction (Prohibition)
Act, 1988 is also proposed subject to certain conditions. We plan to open the
window under this Income Disclosure Scheme from 1st June to 30th September,
2016 with an option to pay amount due within two months of declaration. THE
COMMITMENT: Our Government is fully committed to remove black money
from the economy. Having given one opportunity for evaded income to be
declared once, we would then like to focus all our resources for bringing people
with black money to books. NON-APPLICABILITY OF THE SCHEME IN
CERTAIN CASES: (Extract from the Memorandum explaining the Finance
Bill, 2016) where notices have been issued under section 142(1) or 143(2) or
148 or 153A or 153C, or where a search or survey has been conducted and the
time for issuance of notice under the relevant provisions of the Act has not
expired, or where information is received under an agreement with foreign
countries regarding such income, cases covered under the Black Money Act,
2015, or persons notified under Special Court Act, 1992, or cases covered under
Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985,
the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption
Act, 1988. IMPORTANT: RECENT AMENDMENTS TO THE FINANCE
BILL 2016: Now, the bill passed by Lok Sabha also made referencing to section
119 (Instruction to subordinate authorities) and section 138 (Disclosure if
information respecting taxpayer) to the Scheme.

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 Key Features of Income Declaration Scheme 2016:

1. The scheme is valid between June 1, 2016 and September 30, 2016. The
date can be extended or shortened by the Central Government.
2. The scheme is applicable to both income tax and wealth tax.
3. The tax chargeable is 45% – 30% income tax rate + Krishi Kalyan Cess
on 25% of this tax (which is 7.5%) + penalty on 25% of the tax (7.5%
again).
4. You need to pay the taxes within 2 months from the date of declaring the
assets/income, or within the date notified by the government.
5. If you have declared additional income but not paid taxes by the end of
the deadline, the individual/company will be treated as not having made
any declaration. Additionally, income tax rate as applicable in a normal
case for the previous tax year, would be charged.
6. You can only make one declaration – multiple declarations will not be
entertained. In case of multiple declarations, only the first one will be
considered as valid.
7. If the declaration is made by concealing or distorting facts, it will be
considered as invalid.
8. If you pay the tax and penalty as notified after declaring the additional
income/assets, that amount will not be added to your income in any
assessment years. It will be considered as disparate from the normal
income tax cycle.
9. If assets – immovable or movable – are part of your income or wealth
declaration, the fair market value of the asset as on June 1, 2016, would
be considered as the undisclosed income.
10.In case of a declaration made by a company or firm, the assets/income
declared by the firm/company will not be counted while calculating the
wealth or income of any related or partner firms.
11.The undisclosed income cannot be considered as benami transaction in
certain cases, where the investment is made in an asset, if the said asset is
transferred to the person making the declaration or their legal
representative.
12.The declaration made under this scheme will not be used to charge any
additional penalty or a court case against the individual/company.

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 SCOPE AND COVERAGE

A declaration under the aforesaid Scheme may be made in

respect of any income or income in the form of investment in
any asset located in India and acquired from income
chargeable to tax under the Income-tax Act for any
assessment year prior to the assessment year 2017-18 for
which the declarant had, either failed to furnish a return under
section 139 of the Income-tax Act, or failed to disclose such
income in a return furnished before the date of
commencement of the Scheme, or such income had escaped
assessment by reason of the omission or failure on the part of
such person to make a return under the Income-tax Act or to
disclose fully and truly all material facts necessary for the
assessment or otherwise. Where the income chargeable to tax
is declared in the form of investment in any asset, the fair
market value of such asset as on 1st June, 2016 computed in
accordance with Rule 3 of the Income Declaration Scheme
Rules, 2016 shall be deemed to be the undisclosed income.

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 RATE OF TAX, SURCHARGE AND PENALTY

The person making a declaration under the Scheme would be liable to pay tax at
the rate of 30 percent of the value of such undisclosed income as increased by
surcharge at the rate of 25 percent of such tax. In addition, he would also be
liable to pay penalty at the rate of 25 percent of such tax. Therefore, the
declarant would be liable to pay a total of 45 percent of the value of the
undisclosed income declared by him. This special rate of tax, surcharge and
penalty specified in the Scheme will override any rate or rates specified under
the provisions of the Income-tax Act or the annual Finance Acts.

Effective dates
A declaration under the Scheme can be made anytime on or after 1st June, 2016
but before a date to be notified by the Central Government. The Central
Government has further notified 30th September, 2016 as the last date for
making a declaration under the Scheme and 30th November, 2016 as the last
date by which the tax, surcharge and penalty mentioned in para 4 above shall be
paid. Accordingly, a declaration under the Scheme in Form 1 as prescribed in
the Rules may be made at any time before 30.09.2016. After such declaration,
has been furnished, the jurisdictional Principal CIT/ CIT will issue an
acknowledgment in Form-2 to the declarant within 15 days from the end of the
month in which the declaration under Form-1 is made. The declarant shall not
be liable for any adverse consequences under the Scheme in respect of, any
income which has been duly declared but has been found ineligible for
declaration. However, such information may be used under the provisions of the
Income-tax Act. The declarant shall furnish proof of payment made in respect
of tax, surcharge and penalty to the jurisdictional Principal CIT/CIT in Form-3
after which the said authority shall issue a certificate in Form-4 of the accepted
declaration within 15 days of submission of proof of payment by the declarant

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 BENEFITS & EFECTS OF THE SCHEME

 The amount of undisclosed income declared shall not be

included in the total income of the declarant under the Income-
tax Act for any assessment year;

 The contents of the declaration shall not be admissible in

evidence against the declarant in any penalty or prosecution
proceedings under the Income-tax Act and the Wealth Tax Act;

 Immunity from the Benami Transactions (Prohibition) Act, 1988

shall be available in respect of the assets disclosed in the
declarations subject to the condition that the benamidar shall
transfer to the declarant or his legal representative the asset in
respect of which the declaration of undisclosed income is made
on or before 30th September, 2017;

 The value of asset declared in the declaration shall not be

chargeable to Wealth-tax for any assessment year or years.

 Declaration of undisclosed income will not affect the finality of

completed assessments. The declarant will not be entitled to
claim re-assessment of any earlier year or revision of any order
or any benefit or set off or relief in any appeal or proceedings
under the Income-tax Act in respect of declared undisclosed
income or any tax, surcharge or penalty paid thereon.

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 WHEN SCHEME DOES NOT APPLY
 where a notice under section 142 or section 143(2) or section 148 or
section 153A or section 153C of the Income-tax Act has been issued in
respect of such assessment year and the proceeding is pending before the
Assessing Officer. For the purposes of declaration under the Scheme, it is
clarified that the person will not be eligible under the Scheme if any
notice referred above has been served upon the person on or before 31st
May, 2016 i.e. before the date of commencement of this Scheme.

 In the form of declaration (Form 1) the declarant will verify that no such
notice has been received by him on or before 31st May, 2016.

 where a search has been conducted under section 132 or requisition has
been made under section 132A or a survey has been carried out under
section 133A of the Income-tax Act in a previous year and the time for
issuance of a notice under section 143 (2) or section 153A or section
153C for the relevant assessment year has not expired. In the form of
declaration (Form 1) the declarant will also verify that these facts do not
prevail in his case.

 cases covered under the Black Money (Undisclosed Foreign Income &
Assets) and Imposition of Tax Act, 2015.

 A person in respect of whom proceedings for prosecution of any offence

punishable under Chapter IX (offences relating to public servants) or
Chapter XVII (offences against property) of the Indian Penal Code or
under the Unlawful Activities (Prevention) Act or the Narcotic Drugs and
Psychotropic Substances Act or the Prevention of Corruption Act are
pending shall not be eligible to make declaration under the Scheme.

 A person notified under section 3 of the Special Court (Trial of Offences

Relating to Transactions in Securities) Act or a person in respect of whom
an order of detention has been made under the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, subject to the
conditions specified in the Scheme, shall also not be eligible for making a
declaration under the Scheme.

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 WHEN THE DECLARATION BE
VOID
 In the following situations, a declaration shall be void and shall
be deemed never to have been made :-

 If the declarant fails to pay the entire amount of tax, surcharge

and penalty within the specified date, i.e., 30.11.2016;

 Where the declaration has been made by misrepresentation or

suppression of facts or information.

 Where the declaration is held to be void for any of the above

reasons, it shall be deemed never to have been made and all the
provisions of the Income-tax Act, including penalties and
prosecutions, shall apply accordingly.

 Any tax, surcharge or penalty paid in pursuance of the

declaration shall, however, not be refundable under any
circumstances.

FORMS TO BE FILLED FOR DECLARATION

As per the Scheme, declaration is to be made in such form and

shall be verified in such manner as may be prescribed. The form
prescribed for this purpose is Form 1 which has been duly
notified. The table on next page mentions the persons who are
authorized to sign the said form:

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 Status of

Sl. the Declaration to be signed by

declarant

Individual; where individual is absent from India, person authorized

by him; where the individual is

1. Individual
mentally incapacitated, his guardian or other person competent

to act on his behalf.

Karta; where the karta is absent from India or is

2. HUF mentally incapacitated from attending to his affairs, by any

other adult member of the HUF

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 Managing Director; where for any unavoidable reason the

3. Company managing, director is not able to sign or there is no managing

director, by any director.

Managing partner; where for any unavoidable reason the managing,

partner is not able to sign the

4. Firm
declaration, or where there is no managing partner, by any

partner, not being a minor.

Any other
5. Any member of the association or the principal officer.
association

Any other
6. That person or by some other person competent to act on his behalf.
person

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 RESULTS OF THE SCHEME

 A huge sum of Rs 65,250 crore in black money was declared through the
one-time declaration window, marking the biggest-ever disclosure of
hidden wealth that will rake in Rs 29,362 crore in taxes to the exchequer.

 While the black money declarations may go up further once all the online
and manual filings of undisclosed assets filed at the end of the four-month
window on September 30 are compiled, the government will get this
fiscal nearly Rs 14,700 crore or half of the total taxes due.

 Making the announcement about the declarations made under the Income
Declaration Scheme, Finance Minister Arun Jaitley said 64,275
declarants disclosed an amount totaling Rs 65,250 crore.

 "Some disclosures have not been tabulated... This figure could be revised
upward once the final tabulation is done," he told a news conference in
New Delhi.

 Government had offered a one-time chance to holders of income and

assets that had illegally escaped taxes, to come clean by paying 45 per
cent in tax and penalty.

 On the declarations compiled so far, the government will get Rs 29,362.5

crore in tax and penalty. The declarants can pay this amount in two
installments up to September 30, 2017 half or Rs 14,681.25 crore will
accrue this fiscal.

 Last year, under a similar scheme for foreign black money holders, 644
declarations of undisclosed foreign income and assets were received, and
just Rs 2,428 crore was collected in taxes.

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 REFRENCES
 http://www.incometaxindia.gov.in/Pages/i
ncome-declaration-scheme.aspx
 WWW.WIKIPEDIA.COM
 WWW.TIMESOFINDIA.COM
 WWW.SLIDESHARE.COM
 WWW.REDIFF.COM

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POWER POINT
SLIDES

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