Black from white The Income Declaration Scheme, 2016

Budget 2016-2017
Speech of
Arun Jaitley
Minister of Finance

February 29, 2016


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. 

The surcharge levied at 7.5% of undisclosed income will
be called Krishi Kalyan surcharge to be used for agriculture and rural
economy. 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.

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.


Litigation is a scourge for a tax friendly regime and creates an
environment of distrust in addition to increasing the compliance cost of the
tax payers and administrative cost for the Government. There are about 3
lakh tax cases pending with the 1st Appellate Authority with disputed amount
being 5.5 lakh crores. In order to reduce this number, I propose a new
Dispute Resolution Scheme (DRS).

 A taxpayer who has an appeal pending as of today before the
Commissioner (Appeals) can settle his case by paying the disputed tax and
interest up to the date of assessment. No penalty in respect of Income-tax
cases with disputed tax up to ` 10 lakh will be levied. Cases with disputed
tax exceeding ` 10 lakh will be subjected to only 25% of the minimum of the
imposable penalty for both direct and indirect taxes. Any pending appeal
against a penalty order can also be settled by paying 25% of the minimum of
the imposable penalty. Certain categories of persons including those who are
charged with criminal offences under specific Acts are proposed to be barred
from availing this scheme.

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