Skip to main content

Tax Paid in Black Money Scheme Must be White

Tax payer to get immunity only for unaccounted assets declared, not on tax amount
The income-tax department has said the tax payment for unaccounted assets declared under the black money scheme cannot be made out of any undisclosed income, making it clear that the money used to pay tax must be white.
A tax payer will get immunity under the scheme only in respect of unaccounted assets declared and not on the tax amount, which adds up to 45%, in case it is paid out of unaccounted wealth, the department has clarified through a fourth set of `Frequently asked questions“ on Thursday.
It explained the issue by way of an example. Suppose a person declares Rs. 100 lakh as undisclosed income, being the fair market value of undisclosed immovable property as on June 1, 2016 and pays tax, surcharge and penalty of Rs.45 lakh (30 lakh + 7.5 lakh + 7.5 lakh) on the same out of his other undisclosed income. Effectively, this means that on a total undisclosed income of Rs. 145 lakh, the person paid only Rs. 45 lakh tax, or 31% tax.
“In this case the declarant will not get any immunity under the sche me in respect of undisclosed income of Rs.45 lakh utilised for payment of tax, surcharge and penalty, but not included in the declaration filed under the scheme,“ the department said.
To get immunity under the scheme for the entire undisclosed income of Rs.145 lakh, one would have to pay tax, surcharge and penalty of Rs. 65.25 lakh, the statement said.

Revenue secretary Hasmukh Adhia, speaking at a FICCI seminar on the scheme on Thursday said, “45% is 45%. It is not 31%.“

The department statement said tax payers can file a revised declaration but the amount cannot be less than what was initially declared. Giving comfort to those coming clean, it said a person making declaration under the scheme would not be selected for scrutiny under the scheme only on the ground that there is increase in capital in the balance sheet as a result of the declaration made under the scheme.

The 1% tax at source and no capital gains would be levied when a person gets a benami property transferred in his name after making a declaration under the scheme.

The department also clarified that no public servant can produce a valid declaration before any person or authority.

“We want people to clean up their books,“ finance minister Arun Jaitley said at the Ficci function on Thursday, but warned those who did not use the earlier scheme for foreign assets. “Those who missed the bus have certainly missed the bus,“ he said.

Under the Income Disclosure Scheme, 2016 rules, open till September 30, those declaring unaccounted assets have to pay a tax of 45% (30% tax, 7.5% surcharge and 7.5% penalty).The scheme provides that in case of a valid declaration the department will not make enquiry in respect of sources of income.
The Economic Times New Delhi,15th July 2016

Comments

Popular posts from this blog

Credit card spending growth declines on RBI gaze, stress build-up

  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the...

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...