Income Declaration Scheme: Rs 65,000 cr and counting

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The Capital’s tallest building, the 28-storey Civic Centre near the New Delhi Railway Station, is hardly a hub of action on a weekend night. But September 30 was not like any other Friday evening. It was the last day of the government’s Income Declaration Scheme (IDS). And hours before the midnight deadline, top officials in Mumbai and New Delhi confirmed that the response was overwhelming. Till 11 pm, the pan-India declarations had exceeded Rs 65,000 crore, implying a tax amount or earning of Rs 30,000 crore for the government.

While the final tally will be announced by Finance Minister Arun Jaitley at a press conference on Saturday afternoon, till evening of Friday, Hyderabad emerged as a top destination with declaration of Rs 13,000 crore, followed by Mumbai (Rs 8,500 crore), New Delhi (Rs 6,000 crore) and Kolkata (Rs 4,000 crore).

Business Standard visited Delhi’s Civic Centre, which houses one of the largest income tax offices in the country, to do a reality check of the Narendra Modi government’s ambitious black money declaration scheme just before the window closed. At the main gate, the register kept for visitors’ entry got filled and the second register had more than 100 entries at 9 pm. The basement parking was overflowing through the day, a clear indication that the scheme had picked up momentum on the last day.

Across several floors of the building, aides of those declaring undisclosed income were lined up till late in the evening. All top officers were at work, handholding people who wanted to come out clean, by paying 45 per cent tax on the declared amount. Among the people who had rushed with the income papers along with fat cheques was a 20 something man with a backpack. He represented a businessman, but remained tight-lipped, in the spirit of the scheme that promises not to give away any detail of the people who had responded to the government’s call.

There were more like him, sitting on sofas outside the commissioners’ rooms or at the elevators, trying to reach the right floor before midnight.

“I am just delivering the form for someone else. This is not my declaration,” said one of those, when asked why he waited for the last minute to make the disclosure.

A helpful principal commissioner pointed out that there was a rush of people over the last two days, with most seeking clarifications about the scheme. Many of the last day declarants were the ones whose forms were rejected earlier because of incomplete information, a source said.

With a sigh of relief, another principal commissioner at 10 pm said over Rs 200 crore worth declarations were received in his office, helping him meet the expectations.

There was no time to break for dinner but cooks, sourced from a prominent restaurant chain, were at work, making cuisines for close to 100 people who stayed up till midnight to accept declarations.

A tax officer gave out the secret of the scheme’s success. “Besides the 900,000 letters that were sent out, we intimated individuals whose information we had. Most of them chose to declare it under the scheme to avoid the risk of prosecution after the window closed,” he said.

In fact, it was during the surveys that many individuals decided to declare their unaccounted income or assets. “During surveys, they asked if they could still declare it. We agreed, and that worked,” he said. In the 1997 tax amnesty scheme — Voluntary Disclosure of Income Scheme (VDIS) — the government had received Rs 33,000 crore in declarations. In contrast, only about 644 declarations worth Rs 4,164 crore were made under the black money window for foreign assets last year, resulting in tax collection of Rs 2,428 crore.

The stiff warning from the Prime Minister against the black money holders earlier this month may have also acted as a trigger for people to avail the one-time Scheme. Modi, in an interview to a private channel, had said, “No one should blame me if I take tough decisions after the 30th (of September).”

The IDS, which charges a one-time effective tax rate of 45 per cent on undisclosed income or property, gave a chance to domestic taxpayers to declare undisclosed income or assets by September 30 and avail immunity from prosecution under the Income-tax Act, Wealth Tax Act and Benami Transactions (Prohibition) Act.

Source: http://www.business-standard.com/article/economy-policy/income-declaration-scheme-rs-65-000-cr-and-counting-116093001207_1.html

Banks can accept tax dues in cash under IDS: RBI

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The Reserve bank of India (RBI) on Thursday directed banks to accept tax dues in cash under the domestic black money declaration scheme which closes on September 30. Under the Income Declaration Scheme, 2016, which came into effect on June 1, one can come clean by paying tax, penalty and cess totalling 45 per cent of the undisclosed income.

It was brought to RBI’s notice by the government that “banks are hesitant” in allowing deposit of large amounts of cash by declarants under the scheme.


“We advise that banks must invariably accept cash, irrespective of amount, over the counters from all declarants who desire to deposit cash at the counters, including deposits under the above Scheme through challan ITNS- 286,” the central bank said.

The banks, however, have to comply with the Know Your Customer requirements.

Source: http://www.business-standard.com/article/pti-stories/banks-can-accept-tax-dues-in-cash-under-ids-rbi-116090801067_1.html

IDS: CBDT issues circular endorsing validity of e-declarations

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The CBDT has issued an order endorsing the legal validity of the e-declarations made under the ongoing domestic black money window, known as the Income Declaration Scheme (IDS).

With only a month left for the IDS to close on September 30, the Central Board of Direct Taxes (CBDT) said for those entities who make declarations of their domestic untaxed assets in the online mode, the Commissioner rank officer of its Central Processing Centre (CPC) in Bengaluru will be “deemed” as the authority for receiving such declarations under the relevant sections of the I-T Act.

“In continuation to Circular No 19 of 2016, dated 25th May, 2016, the Commissioner of Income-tax, Centralised Processing Centre, headquartered at Bengaluru shall exercise the concurrent powers and functions in respect of the declaration referred to in section 183 of the Finance Act, 2016 which has been furnished electronically under digital signature and shall also be deemed to be the Principal Commissioner or the Commissioner for the purposes of section 186 of the Finance Act, 2016 in respect of such declaration,” the CBDT said.

The CPC based in Bengaluru is the nodal wing of the tax department to receive online filings and Income Tax Returns.

There are two options to file black money declarations under the one-time IDS, one by filling up physical form before a Principal Commissioner of Income Tax in any part of the country and the other by the official e-filing portal of the I-T department.

“The circular has been brought out to endorse the legal validity of IDS declarations made by the e-filing website. It was issued keeping in mind the legal requirement,” a senior official said.

The CBDT, till now, has issued five sets of clarifications or frequently asked questions (FAQs) containing answers to various questions on the implementation of the IDS.

The government, sometime back, had extended the deadline for payment of tax and penalty under IDS and allowed declarants to pay the amount in three instalments by September 30 next year.

The first instalment of 25 per cent under the IDS 2016 will have to be paid by November 2016, followed by another 25 per cent by March 31, 2017.

The remaining amount 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.

The scheme was announced by the government with an aim to bring out black money from the domestic economy.

The government had come out with a similar scheme for Indians holding undisclosed income abroad.

The scheme will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Source: http://www.thehindu.com/business/Economy/ids-cbdt-issues-circular-endorsing-validity-of-edeclarations/article9056076.ece

Tax resolution scheme: CBDT to write to 2.59 lakh taxpayers

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Keen to bring down the number of tax litigations, the Income Tax Department will soon write to over 2.59 lakh taxpayers asking them to avail the one-time dispute resolution scheme to settle their cases.

And to cut down on communication time, the Central Board of Direct Taxes (CBDT) will use email to communicate with the appellants.

“We have estimated that each Commissioner of I-T (appeal) would have about 300-400 litigations pending before them. We will send these assessees emails informing about the benefits of the dispute resolution scheme,” an official told PTI.

The direct tax dispute resolution scheme, introduced from 1 June, seeks to address the issue of pending litigation before commissioner of I-T (appeal). The scheme is open till 31 December.

As per I-T department data, there were 73,402 appeals with tax effect above Rs.10 lakh and 1,85,858 appeals with tax effect below Rs.10 lakh which are pending before commissioner of I-T (appeal) as on 29 February.

Thus, 2,59,260 appellants are eligible for the benefit of this scheme. “The publicity drive will not be as massive as the IDS. Since we know who our target assessees are, we will send them pamphlets and also emails. Also we will paste some pamphlets outside the CIT (appeals) office,” the official added.

Armed with a Rs.100 crore budget for advertisement of income disclosure scheme (IDS) and disputes resolution scheme, the tax department will now launch a publicity drive for entities which are locked in a litigation. Besides, the CBDT will soon come out with over two dozen FAQs based on the queries it has received from various stakeholders, including chartered accountants and industry chambers.

As per the scheme, a taxpayer who has an appeal pending before the CIT (appeals) can settle his/her case by paying the disputed tax and interest up to the date of assessment. No penalty in respect of cases with disputed tax up to Rs.10 lakh will be levied. For cases exceeding Rs.10 lakh, 25% of penalty would be levied and any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

“Litigation is a scourge for a tax-friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the taxpayers and administrative cost for the government,” finance minister Arun Jaitley had said in his budget speech.

In a first-of-its-kind nationwide publicity drive, the I-T department had tied up with seven airlines including Air India and Vistara to publicise one-time black money compliance window by printing the scheme’s details on the back of boarding passes.

Source: http://www.livemint.com/Politics/s28nm7vx4fQrNG3ldoqm0L/Tax-resolution-scheme-CBDT-to-write-to-259-lakh-taxpayers.html

Parliament passes bill for easier debt recovery

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Parliament today passed a bill which empowers banks to confiscate security in the case of loan default, a development that assumes significance in view of the episode surrounding industrialist Vijay Mallya.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, will not, however, apply to loans for agricultural land as well as student loans.
The bill, approved by Lok Sabha last week and cleared by Rajya Sabha today, amends four laws — Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act. Replying to a debate on the bill, Finance Minister Arun Jaitley emphasised the need for “firmness coupled with fairness” in recovering bad loans. He said the banks must be empowered to take effective legal action against defaulters and the insolvency law, securitisation law and DRT law are steps in that direction.
“So far the laws were in favour of the defaulters. We tried to correct the balance. There should be firmness, coupled with fairness in recovery of loans,” he said. He said banks should take a “compassionate view” on education loan defaults but there will be no waiver and somebody will have to pay. The Minister further said that fears regarding farm and education loans are “exaggerated”.
Jaitley said banks are supposed to give loans and “if banks start squeezing loans”, there will be no economic growth.
“The cause of worry is when loan becomes either NPA or stressed asset or the activity in which the loans are invested is not generating money,” he said adding in some cases there will be willful default.
The development assumes significance as it comes against the backdrop of the episode involving Mallya, who owes Rs 9,000 crore to banks, but has left the country to take refuge in England.
Jaitley said if loan has been taken it must be repaid. The Minister said stressed assets were mostly in sectors such as steel, power and textile.
The law simplifies the procedure which ensures quick disposal of pending cases of banks and financial institutions by Debt Recovery Tribunal (DRT). DRTs will have to dispose a case in 180 days and the affected party will have to deposit 25 per cent of the amount if he or she chooses to appeal against the order.

There are around 70,000 loan related cases pending in the DRTs. To further stress his point, he said 20 people sitting on bank money prevent the lender from giving credit to another 20,000 people. It should not happen that a bank manager has to keep awake all night after he clears a loan, he said.

Source : http://www.moneycontrol.com/news/economy/parliament-passes-bill-for-easier-debt-recovery_7238101.html?utm_source=ref_article

Black money: No cut in tax, warns CBDT

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The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government on Thursday clarified that tax paid under the ongoing amnesty scheme for persons with undisclosed domestic assets can’t be reduced to an effective 31% from 45% prescribed by enjoying immunity not only for such income declared but also for the other undisclosed income from which the tax is paid.

The tax department said its earlier answer to a query in this regard, where it said after a valid declaration is made under the scheme, it won’t make any “enquiry in respect of sources of income, payment of tax, surcharge and penalty”, was “limited to the conduct of enquiry by the department”; the clarification, the department said, was in no way intended to modify the tax rate.

The Income Disclosure Scheme (IDS) 2016 is the latest in a series of such windows opened by governments to address the scourge of black money and the second by the Modi government.

The government had found response to an earlier amnesty scheme for Indians with undisclosed assets overseas tepid. The IDS, under which declarations can be made between June 1 and September 30, 2016, provides persons with hidden income a chance to declare such income/assets and pay tax, surcharge and penalty totalling 45% and enjoy immunity.

What necessitated the latest clarification by the I-T department is an interpretation by sections of analysts that its assurance that no enquiry will be made into “the sources of income, payment of tax” allowed one to pay the 45% tax on the fair market value of the declared asset (immovable property) and claim immunity with respect to not only this asset but an additional one equivalent to 45% of the declared asset as “the source of payment of tax”.

Effectively, this would have reduced the tax rate (including surcharge and penalty) on the assets declared plus the source of income for tax payment to 31%. However, the department has now said this has never been the intention.

Giving the example of a person declaring Rs 100 lakh as undisclosed income (as fair market value of immovable property as on June 1, 2016) under the scheme and paying the stipulated 45% tax on it from her “other undisclosed income”, the department has said:

“To get immunity under the scheme in respect of the entire undisclosed income of R145 lakh, the declarant has to declare undisclosed income of R145 lakh (R100 lakh being the undisclosed income represented by the immovable property and R45 lakh being the payment made from undisclosed income), and pay tax, surcharge, penalty under the scheme amounting to R65.25 lakh, ie, 45% of R145 lakh.”

Meanwhile, in recognition of the concerns raised by many quarters that the initial deadline (November 30, 2016) for making payments under the scheme was very tight and force people to make distress sale of assets, the government has revised the schedule for payments:

As per the new schedule, a minimum amount of 25% of the tax, surcharge and penalty will have to be paid by November 30, 2016; a further amount of 25% of the tax, surcharge and penalty by March 31, 2017; and the balance on or before August 30, 2017.

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 Source: http://www.financialexpress.com/economy/tax-outgo-amnesty-scheme-cant-reduced-31per-cent-cbdt/317162/

Black money window: CBDT issues notification to ensure secrecy

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CBDT today issued a notification making it clear that information about those who declare their black money under the compliance window, ending September 30, will be kept secret.

The notification states that “no public servant shall produce before any person or authority any such document or record or any information or computerised data or part thereof as comes into his possession during the discharge of official duties in respect of valid declaration under the Income Declaration Scheme, 2016.”

The notification also quotes provisions of section 138 of the Income Tax Act which states that taxpayer related information is confidential and cannot be shared.

The fresh notification was issued by the Central Board of Direct Taxes (CBDT), a senior official said, as the department was getting a number of queries with regard to the confidentiality under the Income Declaration Scheme (IDS) or the one-time domestic black money compliance window.

Trade associations and industry bodies had also taken up the issue during their meeting with Finance Minister Arun Jaitley recently.

“The notification now gives legal sanctity to the word of the government that all information related to IDS will be kept confidential. It is aimed to end apprehensions in the minds of potential declarants that their information will find its way in the hands of other probe agencies or will reach the public domain,” the official said.

The IDS is open for four months, between June 1 and September 30 and the CBDT and the IT department have introduced a number of measures to make it a success.

CBDT has so far issued three sets of clarifications on Frequently Asked Questions (FAQs) to clear doubts and answer queries about the IDS.

The department has also published a country-wide list of registered asset valuers for those who wish to declare their untaxed funds and properties under this window.

The CBDT has also directed the taxman to step up publicity by advertising about the IDS at posh markets, clubs and showrooms. Besides, it has promised full privacy would be ensured for those making disclosures for better collections.

Under the scheme, the declarants will have to pay a total of 45 per cent in tax and penalty by November this year. Individuals and entities making disclosures will have immunity from prosecution.

IDS was announced with an aim to flush out black money from the domestic economy. It will apply to undisclosed income whether in the form of investment in assets or otherwise, pertaining to financial year 2015-16 or earlier.

Declarations under IDS can either be made online on the official e-filing website of the tax department or before various regional Principal Commissioners of I-T department.

Source : http://economictimes.indiatimes.com/articleshow/53155906.cms