New Delhi: The government on Thursday clarified that black money declarants usin

g the one-time compliance window cannot pay tax and penalty from undisclosed inc
ome to bring down their liability and such acts will not get any immunity.
The Income Tax Department today came out with a fourth set of clarifications on
the Income Declaration Scheme (IDS) on queries seeking to know if payment under
the Scheme can be made out of the undisclosed income without including the same
in the income declared, which would bring down the effective rate of tax, surcha
rge and penalty payable to around 31 per cent from 45 per cent.
The clarification in the form of frequently asked questions (FAQs) stated that t
here is no intent to "modify or alter the rate of tax, surcharge and penalty pay
able under the Scheme which have been clearly specified in the Scheme itself".
It said further "Sections 184 & 185 of the Finance Act, 2016 unambiguously provi
de for payment of tax, surcharge and penalty at the rate of 45 per cent of undis
closed income".
It offered an illustration: A person declares Rs 100 lakh as the undisclosed inc
ome... as on June 1, 2016, but pays tax, surcharge and penalty of Rs 45 lakh (30
lakh + 7.5 lakh + 7.5 lakh) on the same out of his other undisclosed income.
"In this case, the declarant will not get any immunity under the Scheme in respe
ct of undisclosed income of Rs 45 lakh utilised for payment of tax, surcharge an
d penalty, but not included in the declaration filed under the Scheme," it added
.
To get immunity under the Scheme in respect of the entire undisclosed income of
Rs 145 lakh in this case (Rs 100 lakh undisclosed income being declared and Rs 4
5 lakh being the payment made from the undisclosed income not declared), one has
to pay tax, surcharge and penalty amounting to Rs 65.25 lakh, that is 45 per ce
nt of Rs 145 lakh.
A four-month window starting from June 1 has been provided to persons holding un
declared income and assets to come clean by paying a tax of 30 per cent and inte
rest and penalty of another 7.5 per cent each, totaling 45 per cent.
The window ends on September 30.
On the provision dealing in the declared information not to be shared with the I
-T Department for probe, the FAQ said the government on July 6 through a notific
ation directed that "no public servant shall produce before any person or author
ity any such document or record or any information or computerised data or part
thereof as comes into his possession during the discharge of official duties in
respect of a valid declaration made under the Scheme".
Also, immunity to directors or partners, as the case may be, shall be available
in respect of the undisclosed income declared under the Scheme by the company or
partnership firm.
On the issue of the declarants being selected for scrutiny under the CASS after
IDS declarations in respect of cash and investment resulting in increase in capi
tal in the balancesheet in an extraordinary manner, it said such cases "shall no
t be selected for scrutiny under the CASS only on the ground that there is incre
ase in capital in the balancesheet as a result of the declaration made under the
Scheme".
In the FAQs, the I-T Department said it is expected that the declarations made u
nder the Scheme are filed correctly but a revision will be allowed before Septem
ber 30 subject to certain conditions.

"A revised declaration can be filed on or before the date of closure of the Sche
me provided the undisclosed income in the revised declaration is not less than t
he undisclosed income declared in the declaration already filed," it said.
In a case where the declarant gets the benami asset transferred in his name with
out payment of any monetary consideration to the benamidar, no capital gains wil
l be chargeable.
"In this case, the consideration for acquisition of benami property has already
been paid by the beneficial owner and the fair market value of the property has
been declared by the beneficial owner under the Scheme," the FAQs said.
"Since the transfer of property from the benamidar to the beneficial owner is on
ly to regularise and there will be no involvement of monetary consideration for
transfer of immovable property by the benamidar in the name of the declarant, th
e question of capital gains in the hands of benamidar and deduction of tax at so
urce shall not arise."