Friday, July 15, 2016

Effective rate of tax isn’t reduced to 31% under Income Declaration Scheme; CBDT clarifies

The Income Declaration Scheme, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets.
CBDT has received queries from various stakeholders whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to around 31%.
Now the CBDT has clarified that the intent of the clarification issued vide Question No.5 of Circular No.25 of 2016 was limited to conduct of enquiry by the Department. It in no way intends to modify or alter the rate of tax, surcharge and penalty payable under the Scheme which have been clearly specified in the Scheme itself. 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.

Compliance barriers on the road to GST- An Analysis of Model GST Law

1. Introduction
"Will you walk into my parlour?" said the Spider to the Fly, '
Tis the prettiest little parlour that ever you did spy;
The way into my parlour is up a winding stair,
And I've a many curious things to show when you are there."
Oh no, no," said the little Fly," to ask me is in vain,
For who goes up your winding stair can ne'er come down again."
(an extract of the poem 'The spider & the fly', by Mary Botham Howitt)
With the advent of Goods and Services Tax (GST) in India, the above extract appears to be a fitting & interesting one. While there have been several discussions of how the GST regime would be beneficial to the Indian Economy, the aspect of compliances was never on the agenda. Recently released Model GST Law, throws light on this aspect. While the assessees should revamp their IT systems to be compliant with the new regime, it is also of utmost importance to understand how complying with the statutory timelines could have an impact on their cash flows and credit mechanism. Is tax becoming one of the key factors to drive a business or are we still in an era where business drives the tax. This article attempts to examine whether the compliance aspects under the model GST law are flight's of winding stairs to the spider's parlour or otherwise.