Today's Paper

Those under watch ineligible for income declaration scheme

Tax payers, whose returns were picked for random scrutiny by the authorities in recent years, would not be eligible to turn concealed income into ‘white’ under the Income Declaration Scheme (IDS), announced in the Union Budget to bring black money into the tax net. Experts believe this may prove a dampener for the scheme.

Though the scheme provides immunity from wealth tax, scrutiny and prosecution and from the Benami Transaction Act, it closes the door on anyone whose income is already part of an assessment, reassessment or survey, tax experts say.

The scheme also shuts out ‘innocent’ taxpayers who filed returns on time but whose cases were chosen for scrutiny to verify claims. The scheme will be kept open for four months from June 1.

“Such a notice could be an innocent notice bearing no reference to undisclosed income,” said Ganesh Raj, national leader, policy advisory group at EY, who said the government must consider making such taxpayers eligible.

“Usually, many cases, especially of high net worth individuals, are picked up mechanically for scrutiny and notices are issued,” he said, stressing that some notices are issued on the basis of returns filed by the taxpayer, and are not necessarily linked to undisclosed income.

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