The Lok Sabha approved a confidentiality clause giving protection to the identities of domestic taxpayers who will come forward to disclose their previously undisclosed income, according to reports. A four-month compliance window will be opened from June 1 to Sep. 30, 2016, to facilitate disclosures under the Income Tax Disclosure Scheme.
The Lower house of parliament gave its assent to this and 55 other amendments in the Finance Bill 2016, reported Economic Times.
Finance Minister Arun Jaitley had announced the window in his budget to help unaccounted wealth holders to pay up tax and avoid further penalties and punishment. He had noted that the proposed tax of 45 percent included 30 percent of actual tax and a nominal 7.5 percent of tax as surcharge and penalty each.
"Chapter IX of the Finance Bill seeks to introduce the Income Declaration Scheme, 2016, which provides an opportunity to persons who have not paid full tax in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty, totalling in all to 45 percent of such undisclosed income so declared," the Lok Sabha was apprised, reported ET.
According to Business Standard, the amendment has formally accepted secrecy and delay in returns by the defaulting taxpayers, by importing relevant Sections 138 and 119 of the Income-tax Act to the Income Declaration Scheme, 2016.
Section 138 also provides for such "classified material" not being produced or used in court except to institute or assist in the course of a prosecution for any offence committed in relation to tax.
The compliance scheme stipulates declaration of undisclosed assets at the fair market value (FMV) as existing on the date of commencement of the scheme. FMV, accordingly, will be regarded as cost of acquisition of the asset for any future transactions.