Amnesty scheme for black money to start in June

The Centre on Saturday announced that its amnesty scheme for declaring domestic black money would start from June 1. Individuals willing to declare their black money in the country will have to pay tax and a penalty, totalling 45 per cent, to come clean.

The Income Declaration Scheme, 2016, comes on the heels of a similar scheme launched by the Modi government last year for black money or undisclosed assets in foreign countries.

The scheme launched last year did not have the desired results as the government collected only '2,428 crore in taxes after around 644 declarations were made under the one-time black money compliance window for those who had black money parked abroad.

The domestic black money amnesty scheme came under fire from the Opposition with Congress vice-president Rahul Gandhi calling it the Modi government’s “Fair and Lovely scheme”.

The amnesty scheme will be valid for four months — June 1 to September 30 — for making declarations. Payments towards taxes, surcharge and penalty will have to be made by November 30.

“Under the scheme, such income as declared by the eligible persons, will be taxed at the rate of 30 per cent plus a ‘Krishi Kalyan Cess’ of 25 per cent on the taxes payable and a penalty at the rate of 25 per cent of the taxes payable, thereby totalling to 45 per cent,” stated the finance ministry.

The scheme will apply to undisclosed income whether in the form of investment in assets or otherwise. Where the declaration is in the form of investment in assets, the fair market value of investments in assets as on June 1, 2016, will be deemed to be the undisclosed income under the scheme. Assets specified in the declaration will be exempt from wealth tax.

There will be no scrutiny and enquiry under the Income-Tax Act or the Wealth Tax Act for investments or assets declared under the scheme.

There will be immunity from prosecution under the Income-Tax Act and Wealth Tax Act along with immunity from the Benami Transactions (Prohibition) Act, 1988 subject to transfer of the asset to the actual owner within the period specified in the rules.

Non-payment of total taxes, surcharge and penalty in time or declaration by misrepresentation or suppression of facts will render the declaration void.

Non-declaration of undisclosed income under the scheme will render such undisclosed income liable to tax in the previous year in which it is detected by the income-tax department.