I have used a common parlance of Black money to white money, and I agree there is nothing black or white about any money. Black money is the nomenclature to state the income which was never disclosed and hence never taxed. Indian Government has launched that scheme, Income Declaration Scheme 2016 has received the assent of President on 14th May, 2016, for voluntary disclosure of undisclosed income.
What is this Scheme about?
It is the opportunity to persons who have not disclosed their income ever which was liable for taxation, to come forward and declare the undisclosed income and pay tax, surcharge and penalty (i.e Income Tax @ 45%)
You would be wondering why would someone voluntarily pay that tax? This privilege will shield people from the hefty penalty and litigation if their property is raided by the tax sleuths.
Well this benevolent offer of our Government has begun at 1st June, 2016 and it valid upto 30th September.
The declaration under this scheme is to be made by September, 2016. The time frame for payment of taxes, surcharge and penalty is 30th November, 2016. (Don’t plan to submit declaration and not to pay tax. It will simply disqualify your submission, and tax officers will know you hoard some money).
Procedure for Declaration?
Step 1 : Submit Form-1 on or before 30th September, 2016.
Step 2 : After receipt of Form-1, the CIT (Commisioner of Income Tax) will issue an acknowledgment in Form-2 to the declarant within 15 days from the end of the month in which the declaration under Form-1 is made.
Step 3: The declarant shall furnish proof of payment made in respect of tax, surcharge and penalty to the jurisdictional CIT in Form-3.
Step 4: After this, the CIT shall issue a certificate in Form-4 of the accepted declaration within 15 days of submission of proof of payment by the declarant.
Why this Scheme?
GOI has often released these kind of Voluntary Disclosure Scheme to bring the hidden income in to economy. Though it seems to be an unconventional step, it has been successful in bringing the income in to tax net. VDIS succeeded more than the India finance ministry expected. Over 350,000 individuals, with a sprinkling of companies and firms, disclosed their undisclosed incomes. Sequestered assets worth was over INR 260 billion. With tax levied at 30 per cent of the disclosed asset, the inflow of around INR 78 billion to the treasury is a good one-fifth of what the Government had collected in direct taxes in the past financial year. Watching the success, then Union Finance Minister, P. Chidambaram commented, “It is my faith that, given a chance, the people of India come clean”. He claimed that his team of Income Tax officials had got INR 330 billion to turn white.
Finance Minister had quoted during interviews that this Scheme would not the VDIS launched by P. Chidambaram in 1997, but it is open for discussion.
Why few honest tax payers hate this scheme?
After disclosure under Voluntary Disclosure Scheme, the income-tax defaulters get clean chit from prosecution under various Acts (read FEMA, Benami Transactions act, many more.) Anyways, keeping personal opinion aside, this Scheme is considered to be the golden opportunity for tax-evaders to come clean. Better use it.
For more details of this scheme click here.