Income Declaration Scheme 2016- FAQs..!
The
Income Declaration Scheme, 2016 incorporated as Chapter IX of the Finance Act,
2016 is to come into force with effect from the 1st of June,
2016.
The first part of the Tax Payer Education
Series of Frequently Asked Questions (FAQs) specifying details of the scheme
and clarifying eligibility available under the same has been released by CBDT
and also uploaded on the official website of the Income Tax
Department Incometaxindia.gov.in for viewing. In this regard, Circular No. 17 of 2016 dated
20th May, 2016 issued by the Board provided clarifications to 14
queries. Subsequently to clarify the scheme the Board has issued new
circular no. 24 dated 27-06-2016 by incorporating new issues and their
clarifications.
The
above are aimed at explaining the various provisions of the Scheme with respect
to eligibility, nature of assets, periods of availability, kinds of immunities
available under the scheme and persons excluded from its benefits.
Circumstances in which the scheme shall not apply have also been clarified.
Question 1:
If only part payment of the
tax, surcharge and penalty payable on undisclosed income declared under the
Scheme is made before 30.11.2016, then whether the entire declaration fails as
per section 187(3) of the Finance Act, 2016 or pro-rata
declaration on which tax, surcharge and penalty has been paid remains valid?
Answer:
In
case of part payment, the entire declaration made under the Scheme shall be
invalid. The declaration under the Scheme shall be valid only when the complete
payment of tax, surcharge and penalty is made on or before 30.11.2016.
Question 2:
In case of amalgamation or in case of conversion of a company into
LLP, if the amalgamated entity or LLP, as the case may be, wants to declare for
the year prior to amalgamation/conversion, then whether a declaration is to be
filed in the name of amalgamated entity/LLP or in the name of the amalgamating
company or company existing prior to conversion into LLP?
Answer:
Since
the amalgamating company or the company prior to conversion into LLP is no more
into existence and the assets/liabilities of such erstwhile entities have been
taken over by the amalgamated company/LLP, the declaration is to be made in the
name of the amalgamated company or the LLP, as the case may be, for the year in
which the amalgamation/conversion takes place.
Question 3:
Whether the Scheme is open only to residents or to non-residents
also?
Answer:
The
Scheme is available to every person, whether resident or non-resident.
Question 4:
If undisclosed income relating to an assessment year prior to A.Y.
2016-17, say A.Y. 2001-02 is detected after the closure of the Scheme, then
what shall be the treatment of undisclosed income so detected?
Answer:
As
per the provisions of section 197(c) of the Finance Act, 2016,
such income of A.Y. 2001-02 shall be assessed in the year in which the notice
under section 148 or 153A or 153C, as the case may be,
of the Income-tax Act is issued by the Assessing Officer.
Further, if such undisclosed income is detected in the form of investment in
any asset then value of such asset shall be as if the asset has been acquired
or made in the year in which the notice under
section 148/ 153A /153C is issued and the value shall be
determined in accordance with rule 3 of the Rules.
Question 5:
Whether a person on whom a search has been conducted in April,
2016 but notice under section 153A is not served upto 31.05.2016, is eligible to declare
undisclosed income under the Scheme?
Answer:
No,
in such a case time for issuance of notice under section 153A has not
expired. Hence the person is not eligible to avail the Scheme in respect of
assessment years for which notice under section 153A can be issued.
Question 6:
As per Circular No.17 of 2016, question No.14, it is not
mandatory to attach the valuation report. But Form-1 states “attach valuation
report”. How to interpret?
Answer:
It
is necessary for the declarant to obtain the valuation report but it is not
mandatory for him to attach the same with the declaration made in Form-1.
However, the jurisdictional Pr. Commissioner/ Commissioner in order to
ascertain the correctness of the value of the asset quoted in Form-1 may
require the declarant to file the valuation report before issuing the
acknowledgment in Form-2. In such a circumstance, it will be necessary for the
declarant to make the report available to the Pr. Commissioner/Commissioner.
Question7:
Is it mandatory to furnish PAN in the Form of declaration?
Answer:
Yes,
PAN is the unique identifier for all direct tax purposes. This is also
necessary in order to claim the benefits and immunities available under the
Scheme.
Question 8:
If any proceeding is pending before the Settlement Commission, can
a person be considered eligible for the Scheme?
Answer:
No,
a person shall not be eligible for the Scheme in respect of assessment years
for which proceeding is pending with Settlement Commission.
Question 9:
Land is acquired by the assessee in year 2001 from assessed income
and is regularly disclosed in return of income. Subsequently in the year 2014,
a building is constructed on the said land and the construction cost is not
disclosed by the assessee. What shall be the fair market value of such building
for the purposes of the Scheme?
Answer:
Fair
market value of land and building in such a case shall be computed in
accordance with Rule 3(2) by allowing proportionate deduction in respect of
asset acquired from assessed income.
Question 10:
Whether cases where summons under section 131(1A) have
been issued by the Department or letter under the Non-filer Monitoring System
(NMS) or under section 133(6) are issued are eligible for the
Scheme?
Answer:
Cases
where summons under section 131(1A) have been issued by the department
or letters for enquiry under NMS or under section 133(6) are issued
but no notice under section 142 or 143(2) or 148 or 153A or 153C[as
specified in section 196(e)] of the Finance Act, 2016 has been
issued are eligible for the Scheme.
Question 11:
If notices under section
142, 143(2) or 148 have been issued after 31.05.2016 and
assessee makes declaration under the Scheme then what shall be the fate of
these notices?
Answer:
As
clarified vide Explanatory Circular No. 17 dated 20.5.2016 ,
a person shall not be eligible for the Scheme in respect of the assessment year
for which a notice under
section 142, 143(2) or 148 has been received by him on
or before 31.5.2016. In a case where notice has been received after the said
date, the assessee shall be eligible to make a declaration under the Scheme for
the said assessment year.
Such
declaration shall be valid if it has not been made by suppression of facts or
misrepresentation and the amount payable under the Scheme has been duly paid
within the specified time.
On
furnishing by the declarant the certificate issued by the Pr. Commissioner/
Commissioner in Form-4 to the Assessing Officer, the proceedings initiated vide
notice under section 142, 143(2) or 148 shall be deemed to
have been closed.
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