Income declaration scheme 2016- can we apply in given case.
This query is : Resolved
02 July 2016
Dear experts
please guide
Query is :
The assessee has failed to file ITR for AY 2012-13. the source of income of assessee is from saving bank intt. ( say 3,60,000 on which tds of Rs 61000 deducted) , rental income ( 1,20,000) . also during that year assessee sold one plot ( long term) for Rs 2.25cr giving indexed capital gain of Rs 2.08 Cr and invested the sale proceeds to the tune of Rs 2.15 Cr where as it should be 2.25 as per section 54F.
The assesseee didnot file the return for above said AY since as per his assessment he claimed expemption u/s 54 ( and not 54F ) and the capital gain is exempted and on balance rental and bank itt combined to Rs 4.8 lakhs tds of Rs 61000 has already been deducted which resulted in refund.
Question
1) can we claim this AY income ( rental+ bank intt+ capital gain after exemption u/s 54F) under IDS 2016 and pay tax, cess and penalty on
please guide
Query is :
The assessee has failed to file ITR for AY 2012-13. the source of income of assessee is from saving bank intt. ( say 3,60,000 on which tds of Rs 61000 deducted) , rental income ( 1,20,000) . also during that year assessee sold one plot ( long term) for Rs 2.25cr giving indexed capital gain of Rs 2.08 Cr and invested the sale proceeds to the tune of Rs 2.15 Cr where as it should be 2.25 as per section 54F.
The assesseee didnot file the return for above said AY since as per his assessment he claimed expemption u/s 54 ( and not 54F ) and the capital gain is exempted and on balance rental and bank itt combined to Rs 4.8 lakhs tds of Rs 61000 has already been deducted which resulted in refund.
Question
1) can we claim this AY income ( rental+ bank intt+ capital gain after exemption u/s 54F) under IDS 2016 and pay tax, cess and penalty on
04 July 2016
can any 1 give his opinion...
29 July 2024
The Income Declaration Scheme (IDS) 2016 was introduced as a one-time opportunity for taxpayers to declare undisclosed income or assets and pay tax, cess, and penalty in respect of such income or assets. Here's how it relates to the scenario you described:
### **Eligibility for IDS 2016**
1. **Filing of Return:**
- IDS 2016 applied to income or assets that were not disclosed in previous years and not reported in income tax returns up to the financial year 2015-16. Since the income in question pertains to AY 2012-13, IDS 2016 was indeed applicable during its window (1st June 2016 to 30th September 2016).
2. **Income Declaration:**
- IDS 2016 was intended for undisclosed income or assets. In your case, the income from savings bank interest, rental income, and capital gains were not reported in the ITR for AY 2012-13. However, the scheme does not allow for declaring income that was already disclosed in the original or revised returns.
### **Applying IDS 2016:**
**1. **Non-Filing of Return:**
- Since the return was not filed for AY 2012-13, you can use the IDS 2016 to declare the income if it was undisclosed previously. However, you need to consider the following:
**a. Capital Gains:**
- If the capital gains were claimed as exempt under Section 54 instead of Section 54F, and the investment made was lower than required under Section 54F, this represents a discrepancy. For IDS 2016, you need to declare the actual capital gains, pay tax on the unclaimed portion, and cover the penalty.
**b. Rental Income and Bank Interest:**
- These incomes should be declared, and tax should be paid if not previously reported.
**2. **Tax, Cess, and Penalty:**
- Under IDS 2016, the tax on declared income was to be paid along with a penalty of 45% of the declared income (25% tax plus 25% penalty).
### **Steps to Follow:**
1. **Calculate the Undisclosed Income:**
- **Rental Income:** ₹1,20,000
- **Bank Interest:** ₹3,60,000
- **Capital Gains (after exemption under Section 54F):** ₹2.08 Crore (indexation gain)
2. **Determine the Total Tax Due:**
- **Tax on Capital Gains:**
- **Capital Gain:** ₹2.08 Crore
- **Taxable Capital Gain (if exempted portion is revised):** Calculate tax on the difference between the required investment and actual investment, and consider any penalty.
- **Tax on Rental Income and Bank Interest:** If not already reported, calculate tax payable.
3. **Make the Declaration:**
- File the declaration under IDS 2016, disclosing the total income (bank interest, rental income, and revised capital gains) and pay the tax, cess, and penalty.
4. **Pay Tax, Cess, and Penalty:**
- **Tax:** 25% of the declared income.
- **Penalty:** 25% of the declared income.
- **Cess:** 3% on the tax.
### **Important Considerations:**
1. **Avoid Penalties for Late Filing:**
- Since IDS 2016 was a one-time opportunity, the scheme's window has closed. Any declaration made now would not be under IDS but would require filing of regular returns, and penalties as per the current provisions of the Income Tax Act would apply.
2. **Rectify Past Returns:**
- If IDS 2016 cannot be applied (due to the closure of the scheme), consider filing a revised return (if applicable) and paying any due tax with interest and penalties as prescribed under the current laws.
3. **Consultation with Tax Professional:**
- Given the complexities of your situation, it's advisable to consult a tax professional or chartered accountant to ensure compliance with the latest tax provisions and accurately address any discrepancies.
### **Conclusion:**
In summary, if the income was genuinely undisclosed and falls within the IDS 2016 period, it could have been declared under the scheme. Since IDS 2016 has ended, you should now look into rectifying the past returns and addressing the issue as per current tax regulations, including the payment of any due taxes, interest, and penalties.
### **Eligibility for IDS 2016**
1. **Filing of Return:**
- IDS 2016 applied to income or assets that were not disclosed in previous years and not reported in income tax returns up to the financial year 2015-16. Since the income in question pertains to AY 2012-13, IDS 2016 was indeed applicable during its window (1st June 2016 to 30th September 2016).
2. **Income Declaration:**
- IDS 2016 was intended for undisclosed income or assets. In your case, the income from savings bank interest, rental income, and capital gains were not reported in the ITR for AY 2012-13. However, the scheme does not allow for declaring income that was already disclosed in the original or revised returns.
### **Applying IDS 2016:**
**1. **Non-Filing of Return:**
- Since the return was not filed for AY 2012-13, you can use the IDS 2016 to declare the income if it was undisclosed previously. However, you need to consider the following:
**a. Capital Gains:**
- If the capital gains were claimed as exempt under Section 54 instead of Section 54F, and the investment made was lower than required under Section 54F, this represents a discrepancy. For IDS 2016, you need to declare the actual capital gains, pay tax on the unclaimed portion, and cover the penalty.
**b. Rental Income and Bank Interest:**
- These incomes should be declared, and tax should be paid if not previously reported.
**2. **Tax, Cess, and Penalty:**
- Under IDS 2016, the tax on declared income was to be paid along with a penalty of 45% of the declared income (25% tax plus 25% penalty).
### **Steps to Follow:**
1. **Calculate the Undisclosed Income:**
- **Rental Income:** ₹1,20,000
- **Bank Interest:** ₹3,60,000
- **Capital Gains (after exemption under Section 54F):** ₹2.08 Crore (indexation gain)
2. **Determine the Total Tax Due:**
- **Tax on Capital Gains:**
- **Capital Gain:** ₹2.08 Crore
- **Taxable Capital Gain (if exempted portion is revised):** Calculate tax on the difference between the required investment and actual investment, and consider any penalty.
- **Tax on Rental Income and Bank Interest:** If not already reported, calculate tax payable.
3. **Make the Declaration:**
- File the declaration under IDS 2016, disclosing the total income (bank interest, rental income, and revised capital gains) and pay the tax, cess, and penalty.
4. **Pay Tax, Cess, and Penalty:**
- **Tax:** 25% of the declared income.
- **Penalty:** 25% of the declared income.
- **Cess:** 3% on the tax.
### **Important Considerations:**
1. **Avoid Penalties for Late Filing:**
- Since IDS 2016 was a one-time opportunity, the scheme's window has closed. Any declaration made now would not be under IDS but would require filing of regular returns, and penalties as per the current provisions of the Income Tax Act would apply.
2. **Rectify Past Returns:**
- If IDS 2016 cannot be applied (due to the closure of the scheme), consider filing a revised return (if applicable) and paying any due tax with interest and penalties as prescribed under the current laws.
3. **Consultation with Tax Professional:**
- Given the complexities of your situation, it's advisable to consult a tax professional or chartered accountant to ensure compliance with the latest tax provisions and accurately address any discrepancies.
### **Conclusion:**
In summary, if the income was genuinely undisclosed and falls within the IDS 2016 period, it could have been declared under the scheme. Since IDS 2016 has ended, you should now look into rectifying the past returns and addressing the issue as per current tax regulations, including the payment of any due taxes, interest, and penalties.
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