The government extended the deadline for payment of tax and penalty under the black money disclosure scheme and allowed declarations to pay the amount in three installments by September 30 next year. Revenue Secretary Hasmukh Adhia said at a FICCI seminar that staggered payment schedule will ensure that tax payers are not forced to resort to distress sale of their assets to pay taxes on income disclosed under the scheme.
The first installment of 25 per cent under the Income Declaration Scheme 2016 will have to be paid by November 2016 to be followed by another installment of 25 per cent by March 31, 2017. The remaining amount, according to a finance ministry statement, will have to be paid to the exchequer by September 30, 2017. Earlier the tax, surcharge and penalty under the black money disclosure window were required to be paid by November 30 this year.
The Revenue Department has decided to revise the time schedule for making payments after taking into consideration the practical difficulties being faced by the stakeholders, it said. The Budget for 2016-17 announced a 4-month compliance window, allowing domestic black money holders to declare their unaccounted wealth, pay a tax and penalty of 45 per cent and escape prosecution and harsher punishment. The window under the IDS 2016 opened on June 1 and will close on September 30. Meanwhile, speaking at a workshop on the scheme organised by FICCI on Thursday, finance minister Arun Jaitley said the government wants people to clean up their books using this scheme. “The relationship between the taxmen and the assesse is undergoing change though it is still a work in progress. The change will be visible in the future. Apprehensions and fears need to be eliminated and discretions will have to disappear,” he said.
Addressing other queries received from stakeholders on whether the payment under IDS can be made out of undisclosed income, without including it in the income declared — thereby whittling down the effective tax rate to 31 per cent — the tax department has clarified that there is no intent to “modify or alter the rate of tax, surcharge and penalty payable under the scheme”.
The clarification in the form of frequently asked questions (FAQs) stated that “Sections 184 & 185 of the Finance Act, 2016, unambiguously provide for payment of tax, surcharge and penalty at the rate of 45 per cent of undisclosed income”.
It offered an example: If a person declares Rs 100 lakh as undisclosed income, being the fair market value of undisclosed immovable property as on June 1, 2016, and pays tax, surcharge and penalty of Rs 45 lakh (30 lakh + 7.5 lakh +7.5 lakh) on it out of his other undisclosed income, he won’t get any immunity.
“In this case the declarant will not get any immunity under the scheme in respect of undisclosed income of 45 lakh utilised for payment of tax, surcharge and penalty but not included in the declaration filed under the Scheme,” according to the clarification.
To get immunity under the scheme in respect of the entire undisclosed income of Rs 145 lakh (Rs 100 lakh being immovable property and Rs 45 lakh being the payment made from undisclosed income), a person must pay tax, surcharge and penalty under the scheme amounting to Rs 65.25 lakh i.e, 45 per cent of Rs 145 lakh. The tax department said a revision in the declaration before the close of the window on September 30 will be allowed subject to the condition that the reported amount is not reduced.