Budget 2019 proposes to allow black money scheme 2016 declarants another chance to pay up

Budget 2019 proposes to effectively re-open the Income Declaration Scheme 2016 (or black money declaration scheme) for a specified category of those people who had declared unaccounted income under the scheme but not paid up the tax, surcharge and penalty by the due date. The budget proposes that a specified category of such people would be allowed to pay up the requisite amount, along with 1% interest per month, within a date to be notified by the government. This essentially means that such category of declarants under the Income Declaration Scheme, 2016 will get another chance to pay up and wipe their slate clean. Through the Finance Bill the government aims to empower itself to be able to notify this category of people. 

What is more, the budget also proposes to allow refund of excess money paid under this scheme for a 'class of persons' to be notified later by the government. These amendments are proposed to be made retrospectively from June 1, 2016. 

Says Shalini Jain, partner, people advisory services, EY: “The Government is providing another chance to the tax payers who declared undisclosed incomeunder the Income Tax Declaration scheme introduced in the Budget 2016 which was operative up to 30 September 2016, but missed to pay taxes, interest and penalty in prescribed instalments up to 30 September 2017 and thereby disqualified from immunities granted under the scheme. They will now be able to pay the amounts due under the scheme along with interest at the rate of 1 percent from the relevant due date of such pay-out till the date of actual pay-out. The Government will define the class of persons who could be eligible for this amended provision and shall also notify the last date to make such payment including interest.” 

The explanatory memorandum of the budget documents under the headling-'Rationalisation of the Income Declaration Scheme, 2016' states: 

"The existing provisions of section 187 of the Finance Act, 2016 provide, inter alia, that the tax, surcharge & penalty in respect of the undisclosed income, declared under the Income Declaration Scheme, 2016 (the Scheme) shall be paid on or before a notified due date. In order to address genuine concern of the declarants, it is proposed to amend the said section so as to provide that where the amount of tax, surcharge and penalty, has not been paid within the due date, the Central Government may notify the class of persons who may make the payment of such amount on or before a notified date, along with the interest on such amount, at the rate of one per cent of every month or part of a month, comprised in the period, commencing on the date immediately following the due date and ending on the date of such payment. Further, the existing section 191 of the Finance Act, 2016 provides, inter alia, that any amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Scheme shall not be refundable. In order to address genuine concern of the declarants, it is proposed to amend the said section so as to provide that the Central Government may notify the class of persons to whom the amount of tax, surcharge and penalty, paid in excess of the amount payable under the Scheme shall be refundable. This amendment will take effect retrospectively from 1st June, 2016". 

The Income Declaration Scheme, 2016 came into effect from 1st June, 2016. It provided an opportunity to persons who had not paid full taxes in the past to come forward and declare their undisclosed income and assets. Declarations could be made online as well in printed copies of the prescribed form up to midnight on 30th September, 2016. The last date by which declarants under the scheme had to pay up the tax, surcharge and interest due was 30.09.2017. 

As a consequence, 64275 declarations were filed upto the midnight of 30th September, 2016 with an aggregate of Rs.65250 Crore worth of hitherto undeclared incomes in the form of cash and other assets being declared. 

The above mentioned scheme provided an opportunity to those who didn’t disclose income and pay taxes thereon in the past. The persons declaring the undisclosed income were required to pay tax at 30 per cent of undisclosed income, surcharge at the rate of 25% of the tax and penalty at the rate of 25 per cent of the tax on undisclosed income. The total 45 per cent of the undisclosed income was paid as tax.

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