File Content -
Page 1 of 5
Circular No.25 of 2016
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated 30th of June, 2016
Clarifications on the Income Declaration Scheme, 2016
The Income Declaration Scheme, 2016 (hereinafter referred to as ‘the Scheme’)
incorporated as Chapter IX of the Finance Act, 2016 provides an opportunity to persons
who have not paid full taxes in the past to come forward and declare the undisclosed
income and pay tax, surcharge and penalty totaling in all 45% of such undisclosed income
declared. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as ‘the IDS
Rules’) have been notified. In this regard, Circular No. 17 of 2016 dated 20th May, 2016 and
Circular No. 24 of 2016 dated 27th June, 2016 issued by the Board provided clarifications to
14 and 11 queries respectively. Subsequently, further queries have been received from the
public about various provisions of the Scheme. The Board has considered the same and
the following clarifications are issued.-
Question No.1: Will the information contained in the declaration be shared with
other law enforcement agencies?
Answer: No; the information contained in the declaration shall not be shared
with any other law enforcement agency. The information will also
not be shared within the Income Tax Department for any
investigation in respect of a valid declaration.
Question No.2: Whether immunity will be provided under other economic laws
including Service Tax, VAT, Companies Act, SEBI Act & regulations
Answer: The Scheme provides immunity under the Income-tax Act, 1961, the
Wealth-tax Act, 1957 and the Benami Transactions (Prohibition) Act,
1988. Immunity from Benami Transactions (Prohibition) Act is subject
to the condition that the property will be transferred to the declarant
(being the person who provided the consideration for the property)
latest by 30th September, 2017. However, as mentioned in response
to Question No.1 above, the information contained in the declaration
Page 2 of 5
made under the Scheme will not be shared with any other tax or law
Question No.3: Where the value of immovable property determined under Rule 3 of
the IDS Rules is lower than the value adopted or assessed/assessable
by stamp valuation authority referred in section 50C or section 43CA
of the Income-tax Act, whether value of such property is to be
declared as per Rule 3 of the IDS Rules, or as per section 50C/43CA?
Answer: The value of the property for the purposes of declaration in such
cases shall be computed as per Rule 3 of the IDS Rules even if such
value is lower that the value adopted or assessed/assessable by
stamp valuation authority.
Question No.4: Whether credit for tax deducted, if any, in respect of income declared
shall be allowed?
Answer: Yes; credit for tax deducted shall be allowed only in those cases
where the related income is declared under the Scheme and the credit
for the tax has not already been claimed in the return of income file
for any assessment year.
Question No.5: Where a valid declaration is made after making valuation as per the
provisions of the Scheme read with IDS Rules and tax, surcharge &
penalty as specified in the Scheme have been paid, whether the
department will make any enquiry in respect of sources of income,
payment of tax, surcharge and penalty?
Question No.6: What is the purpose of obtaining the information about the nature of
undisclosed income in the last column of table at point (I) relating to
nature of undisclosed income in Annexure to Form-1?
Answer: The purpose of obtaining information about the nature of undisclosed
income is to know whether the undisclosed income is in the form of
moveable asset, immovable asset, gold, jewellery or cash. Here, the
nature of income need not be confused with the source of income.
There is no need to indicate the source of income at all. In the column
meant for nature of undisclosed income one has to write the
nomenclature such as ‘immovable property’, ‘moveable property’,
‘gold’, ‘jewellery’ or ‘cash’ etc. This will enable the taxpayer to
establish the link between the income declared under the scheme and
Page 3 of 5
the claim, if any, made in respect of such undisclosed income in the
return of income filed subsequently or during any assessment
Question No.7: In case the value of immovable property is evidenced by registered
deed, whether the value as per registered deed or the market value as
on 01.06.2016 is to be declared?
Answer: As per Rule 3 of the IDS Rules, the fair market value of an immovable
property shall be the higher of its cost of acquisition and the price that
the property shall ordinarily fetch if it is sold in the open market as on
1st June, 2016. The value mentioned in the registered deed shall be
relevant for determining the cost of acquisition and the same can be
taken as the fair market value only where it is higher than the price
that the property shall ordinarily fetch if sold in the open market as
on 1st June, 2016.
Question No.8: In case a declaration relating to investment in undisclosed asset is
made under the Scheme, whether any investigation will be initiated
against the seller in respect of such declaration?
Question No.9: What are the advantages of the Scheme as against declaring the past
undisclosed income as current income in the return of income to be
filed for Assessment Year 2017-18? How will the Department identify
the year in which the undisclosed income was earned.
Answer: In this regard, the following points may be noted:
Declaration of past undisclosed income in the current year
amounts to false verification of return of income which shall
attract prosecution under the Income-tax Act.
If anyone attempts to disclose past undisclosed income in the
current year, he will have to explain the source of income and
substantiate the manner of earning the said income. In case of
disclosure under the Scheme, there is no need to explain the
source of income.
Page 4 of 5
Declaration of past undisclosed income in the current year
cannot explain assets acquired in the past or provide any
immunity in respect of the same.
The Income-tax Department is in receipt of large volume of
information from various sources such as registrars of
property, banks, financial institutions, stock exchanges, tax
deductors etc. The Department has launched a comprehensive
data-mining and compliance management programme in the
form of ‘Project Insight’ which will generate a large volume of
reliable information about financial transactions undertaken by
taxpayers and the relevant year in which the transaction was
Question No.10: In a case the declarant earned undisclosed income of Rs. 90 lakh in
previous year 2010-11. Out of the same, he acquired an immovable
property in the previous year 2011-12 for Rs.50 lakh, made personal
expenditure to the extent of Rs.20 lakh and balance Rs.20 lakh is left
with him as cash in hand on 01.06.2016. The fair market value of the
immovable property as on 01.06.2016 is Rs.80 lakh. What is the
amount to be declared under the Scheme?
Answer: The declarant in this case has to declare the following:
(i) Rs. 80 lakh being fair market value of the immovable property
as on 01.06.2016
(ii) Rs. 20 lakh being the cash in hand as on 01.06.2016
(iii) Rs. 20 lakh being the balance of undisclosed income [Rs. 90
lakh – (Rs.50 lakh + Rs. 20 lakh)] which is not represented in
the form of investment in any asset.
Thus the total undisclosed income to be declared in this case will be
Rs. 1.20 crore.
Question No.11: A person invested his undisclosed income in a house property in the
previous year 2010-11 which has not been let out. The person also
owned another house property from disclosed sources, which has
been claimed as self-occupied property for the purposes of
computation of income under the head income from house property.
In case the person declares the undisclosed house property at its fair
market value on 01.06.2016, whether any action will be taken for
bringing the annual value of the undisclosed property to tax as
income from house property by deeming it to be let property as
Page 5 of 5
provided under section 23(4)(b) of the Income-tax Act for the earlier
Answer: No. However, where the house property was let-out during the
relevant period, the actual rent received or receivable will be required
to be declared under the Scheme in addition to the fair market value
of the house property as on 01.06.2016.
(Dr. T.S. Mapwal)
Under Secretary to the Government of India
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
3. The Chairperson, Members and all other officers in CBDT of the rank of Under
Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax – with a request to
circulate amongst all officers in their regions/ charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr.
6. CIT (M&TP), CBDT.
7. Web manager for posting on the departmental website.