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Paying Tax from Undeclared Income, then No Immunity

The tax rate under the scheme varies from 31 percent to 45 percent

Policy Pulse
Publish Date: Jul 14 2016 3:16PM | Updated Date: Jul 14 2016 3:23PM

Paying Tax from Undeclared Income, then No Immunity
As the government declares Income Declaration Scheme (IDS), there were a lot of questions that rose after this regarding the provision of immunity to people who are likely to pay tax under the scheme.
 
Amidst such questions, the government has clarified that those declarants who will use one time compliance window will not be able to pay tax from their undeclared income.
 
For instance, suppose a man declares his undeclared property to be Rs 1 crore, then according to the scheme, he will have to pay Rs 45 lakhs. If the person pays the tax from undeclared income than those Rs 45 lakhs will be considered another undeclared income. 
 
According to the scheme, if people pay tax from undeclared income, then those people will not be eligible for the immunity from the government. 
 
The tax rate under the scheme varies from 31 percent to 45 percent.
 
Sections 184 & 185 of the Finance Act, 2016 unambiguously provide for payment of tax, surcharge and penalty at the rate of 45 per cent of undisclosed income.
 
A four-month window starting from June 1 has been provided to persons holding undeclared income and assets to come clean by paying a tax of 30 per cent and interest and penalty of another 7.5 per cent each, totaling 45 per cent. The window ends on September 30.