1. The Government has introduced Income Declaration Scheme, 2016 which has come into force from 1st June, 2016. The scheme provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all to 45% of such undisclosed income declared. Further, as per scheme, declaration of undisclosed income in the form of assets is to be made at Fair Market Value of such assets as on 1st June, 2016.
It is felt everywhere that the total impact of tax in case of declaration of undisclosed income under the scheme is quite high and, therefore, the initial response of the taxpayers regarding the scheme is not encouraging one.
Clarifications issued by CBDT
2. The CBDT has issued three sets of Frequently Asked Questions (FAQs) containing 36 clarifications relating to various controversial aspects clarifying doubts regarding the operation of the scheme. One clarification has been issued by the CBDT by way of Circular No. 25/2016, dated 30th June, 2016 addressing question no. 5 which is reproduced as under:—