Income Declaration Scheme’2016

Income Declaration Scheme’2016 – Latest Developments


(a)       Instruction No. 9 of 2016 (IDS) dated 27-09-2016

(Non –indexation of assets sold prior to 01-06-2016)

CBDT issues yet another clarification on the Income Declaration Scheme (‘IDS’), clears air on making declaration with respect to sale made prior to June 1, 2016 of capital asset acquired out of undisclosed income and sale proceeds held in cash.

Instances have been brought to the notice of the Board that some taxpayers are of the view that if a capital asset acquired out of undisclosed income is sold before 01.06.2016 and the sale proceeds so received are held in cash, then the amount of undisclosed income required to be declared under the Scheme shall be the amount of undisclosed income invested in acquisition of such capital asset as increased by the capital gain arising on sale of such asset determined in accordance with the provisions of the Income-tax Act, 1961 ( consideration less indexed cost of acquisition).

Clarifying the position, the Board has clarified that as per the provisions contained in section 183(2) of the Scheme that where the income chargeable to tax is represented in the form of investment in any asset, the fair market value of such asset as on 01.06.2016 shall be deemed to be the undisclosed income for the purposes of the Scheme. In this context, it may be noted that cash in hand is an asset for the purposes of the Scheme.

(b)       Instruction No. 10 of 2016 (IDS) dated 28-09-2016

(Filing declarations in non pan cases)

In cases where the declarant is not having a PAN or PAN is pending allotment and the assessee is not likely to get PAN by the date of closure of the Scheme i.e. 30.09.2016, the CBDT has clarified that in such cases a declaration under the Scheme can be filed manually before the jurisdictional Pr.Commissioner/Commissioner by quoting the date and acknowledgment number of PAN application form.

However, the jurisdictional Pr.Commissioner/ Commissioner shall issue Form-2 only after the allotment of PAN to the declarant. The time limit provided for issuance of Form-2 under sub-rule (3) of rule 4 of the Income Declaration Scheme Rules, 2016 in such cases shall apply from the date on which PAN has been allotted to the declarant. In case, PAN allotment could not be made due to non­compliance/non-furnishing of documents by the declarant, the declaration shall be treated as invalid.

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