Disclosures made in the 4-month compliance window beginning June 1 for domestic black money holders to come clean will be kept secret, according to an amendment to the Finance Bill 2016 approved by the Lok Sabha.
Finance Minister Arun Jaitley brought 21 amendments when he replied to the debate on the Finance Bill 2016 in the Lok Sabha on Thursday. The Bill and the amendments were approved, making the culmination of the 3-stage budgetary process in the Lok Sabha. The Bill will now go to the Rajya Sabha.
“Chapter IX of the Finance Bill seeks to introduce the Income Declaration Scheme, 2016, which provides an opportunity to persons who have not paid full tax in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty, totalling in all to 45 per cent of such undisclosed income so declared,” the narration of the amendments released by the Finance Ministry in New Delhi on Friday said.
Now, Sections 138 and 119 of the Income-tax Act have been imported to the Income Declaration Scheme, 2016, it said.
Section 138 relates to treating material disclosed as confidential. It also provides for such “classified material” not being produced or used in court except in order to institute or assist in the course of a prosecution for any offence committed in relation to tax.
Section 119 pertains to delays in filing returns.
The government plans to open the compliance window under the Income Tax Disclosure Scheme from June 1 to September 30 for domestic tax payers to declare undisclosed income represented in any form of assets and clear up past transgression by paying tax at 30 per cent, surcharge at 7.5 per cent and penalty at 7.5 per cent.
The total due of 45 per cent is to be paid within two months of declaration.
“The scheme provides that 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 the date of commencement of the scheme shall be deemed to be the undisclosed income for the purposes of the scheme,” another amendment said.
Also, the cost of acquisition for the purpose of computation of capital gains on subsequent transfer of such asset by the declarant shall be the fair market value as on the date of commencement of the scheme.
“This amendment will be effective for the assessment year 2017-18 and subsequent assessment years,” it said.
In the last Budget, the government had come out with a similar compliance window for people holding undisclosed assets abroad. Disclosures during that window were charged with a total tax and penalty of 60 per cent.
A total of Rs. 4,147 crore of undisclosed wealth was declared during the 90-day foreign black money compliance window that ended September 30, 2015. At 60 per cent (30 per cent tax and 30 per cent penalty), the government got a net tax of Rs. 2,500 crore from the declarations.
