Last Chance To Disclose Your Undeclared Income: Five Things To Know

Income Declaration Scheme (IDS), 2016, is a one-time window of opportunity for income tax assessees to declare any unaccounted income from the past. It will close on September 30, 2016. Tax experts say that people should make use of this opportunity.

Here are five things to know about this special scheme:

1) There will be no enquiry, prosecution against the person who uses this window to declare undisclosed income. The scheme also provides immunity under other acts like the Benami Transactions (Prohibition) Act and Wealth Tax Act. However, a person already involved in litigation or proceedings under Income Tax Act or any other Act cannot avail the scheme.

2) Further, any information declared under the scheme will not be shared with any of the law enforcement agencies and will not be shared within the income tax department for any investigation.

3) The penalty charged is lower compared to similar schemes launched earlier. Under the scheme a penalty of 45 per cent will be charged on the total declared income. "The penalty under the Undisclosed Foreign Income & Assets Bill was 90 per cent or 120 per cent in some cases of the disclosed assets or income," says Preeti Khurana, chief editor of Cleartax portal. "If one fails to avail the opportunity, law will take its own course and the person may face enquiry or persecution as per the provisions of the law."

4) Tax experts say that people who are using the window to declare their unaccounted income should not misrepresent or suppress facts. "Failure to pay the entire amount of tax and penalty on or before 30 November 2016, or any misrepresentation or suppression of facts or information, will render the declaration void," says Amit Maheshwari, managing partner of Ashok Maheshwary and Associates LLP. Any income which is declared under the scheme as investment in an asset, then it has to be declared at the current fair market value.

5) Once a declaration is rejected, it shall be deemed that no declaration was made. In such a case, the tax department can initiate necessary action as prescribed under the Income Tax Act, he added.

Income Declaration Scheme (IDS), 2016, is a one-time window of opportunity for income tax assessees to declare any unaccounted income from the past. It will close on September 30, 2016. Tax experts say that people should make use of this opportunity.

Here are five things to know about this special scheme:

1) There will be no enquiry, prosecution against the person who uses this window to declare undisclosed income. The scheme also provides immunity under other acts like the Benami Transactions (Prohibition) Act and Wealth Tax Act. However, a person already involved in litigation or proceedings under Income Tax Act or any other Act cannot avail the scheme.

2) Further, any information declared under the scheme will not be shared with any of the law enforcement agencies and will not be shared within the income tax department for any investigation.

3) The penalty charged is lower compared to similar schemes launched earlier. Under the scheme a penalty of 45 per cent will be charged on the total declared income. "The penalty under the Undisclosed Foreign Income & Assets Bill was 90 per cent or 120 per cent in some cases of the disclosed assets or income," says Preeti Khurana, chief editor of Cleartax portal. "If one fails to avail the opportunity, law will take its own course and the person may face enquiry or persecution as per the provisions of the law."

4) Tax experts say that people who are using the window to declare their unaccounted income should not misrepresent or suppress facts. "Failure to pay the entire amount of tax and penalty on or before 30 November 2016, or any misrepresentation or suppression of facts or information, will render the declaration void," says Amit Maheshwari, managing partner of Ashok Maheshwary and Associates LLP. Any income which is declared under the scheme as investment in an asset, then it has to be declared at the current fair market value.

5) Once a declaration is rejected, it shall be deemed that no declaration was made. In such a case, the tax department can initiate necessary action as prescribed under the Income Tax Act, he added.