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Tax dept expresses capital gains worries

It clarifies that either it or Financial Intelligence Unit will take any tough action only on basis of cash deposits done in banks from the sale proceeds for IDS declaration

Policy Pulse
Publish Date: Aug 19 2016 9:58AM | Updated Date: Aug 19 2016 9:58AM

Tax dept expresses capital gains worries

 Expressing concerns of potential users of the Income Declaration Scheme (IDS) window over substantial capital gains tax outgo in addition to the 45 percent tax they need to pay while declaring unrevealed assets under the scheme, the Central Board of Direct Taxes has said that the period of holding of the immovable property will be taken on the basis acquisition date of the property and not from June 1 2016 as stated earlier.

 
Experts felt that since most declarants under the scheme could need to sell their assets to meet the IDS tax liability, the relaxation would be helpful for them and improve the scheme’s ability to uncover unaccounted wealth. 
 
Department also clarified that either it or the Financial Intelligence Unit won’t take any tough action only on the basis of cash deposits done in banks from the sale proceeds for IDS declaration.
 
“..,where acquisition of an immovable property is evidenced by a registered deed, an option shall be available with the declarant to declare the fair market value of such property by applying the cost inflation index to stamp duty value of the property….. the period of holding of assets under the Scheme shall be taken on the basis of the actual date of acquisition of such asset and not from 1.6.2016 as clarified earlier,” a CBDT release said.
 
Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP, told ‘The Financial Express’ that Many of the undisclosed assets to be revealed under the scheme  would be disposed to pay tax liabilities and would be considered as long-term in nature for majority of cases if the holding period is taken from the date of acquisition. 
 
This would attract lower tax liabilities in case of disposal. When taxpayers are eager to come out clean then they should be able to start with a clean slate, he told the paper.