The income declaration scheme was originally incepted in order to keep people from indulging in fraudulent behavior or evading tax. This scheme was originally established by Finance Minister, Mr. Arun Jaitley.
In an effort to encourage tax evaders to file their income tax returns, Finance Minister Arun Jaitley introduced the Income Tax Declaration Scheme in 2016 as part of the Finance Bill, 2016. Under this scheme, anyone who has not disclosed their income or assets truthfully in the previous tax assessment year can divulge the details to the government. In turn, they will have to pay a tax of flat 45% instead of the random penalty amounts enforced.
However, if individuals or companies have "secret stash" of cash hidden away from the taxman's eyes and that stash is found by the government any time in the future, the amount will be added to the income tax slab of the assessment year in which it comes to light and tax and penalties charged accordingly.
Learn more on: Income Tax, Income Tax Slabs, e-Filing Income Tax, Income Tax Refund, How to file ITR and Income Tax Return in our artilces
Section 2(31) of the Income Tax Act specifies which kinds of entities can file tax. These are:
All the above 7 categories of entities can declare additional income up to assessment year 2016-17 through the Income Declaration Scheme. The following individuals or companies, however, are not allowed to take advantage of this scheme:
Given below are the main features of this scheme:
While the scheme is "quite encouraging" according to financial experts, we will have to wait and watch to see how many declarations will be made and how much revenue the government makes out of it. This is a kind of amnesty scheme offering defaulters a chance to come clean, and is reminiscent of the Voluntary Disclosure of Income Scheme (VDIS) of 1997, which garnered a revenue of over Rs. 7,800 crore (INR 78 billion) for the government. However, while VDIS granted immunity from legal punishments to the individuals/companies who disclosed their true income, the Income Declaration Scheme of 2016 merely offers a "discount" on the tax penalty.
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2025 BankBazaar.com.