Union Budget 2016-2017 : FM opens compliance window to declare undisclosed income
29 February 2016
Finance Minister in his Budget speech highlights the government's priority towards a lower tax regime with non-litigious approach, giving an opportunity to the earlier non-compliant to move to the category of compliant.
Reiterating the government's commitment to reduce black money, Arun Jaitley announced that domestic tax payers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30 per cent, and surcharge at 7.5 per cent and penalty at 7.5 per cent, which is a total of 45 per cent of the undisclosed income. Such declarants will have immunity from prosecution.
He said that Surcharge levied at 7.5 per cent of undisclosed income will be called Krishi Kalyan Surcharge to be used for agriculture and rural economy.
Announcing the New Dispute Resolution Scheme, he said that no penalty will be charged in respect of cases with disputed tax up to Rs10 lakh. Cases with disputed tax exceeding Rs10 lakh will be subjected to 25 per cent of the minimum of the imposable penalty.
Any pending appeal against a penalty order can also be settled by paying 25 per cent of the minimum of the imposable penalty and tax interest on quantum addition, he said.
Jaitley announced a High Level Committee chaired by Revenue Secretary to oversee fresh cases where Assessing Officer applied the retrospective amendment.
In case of mis-reporting of facts, the Finance Minister proposed penalty rates of 200 per cent of tax and 50 per cent penalty in case of under-reporting of income. This allowance will be limited to 1 per cent of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under Rule-AD of Section -14A of Income Tax Act.
There will be a time limit of one year for disposing petitions of the tax-payers seeking waiver of interest and penalty. It will be mandatory for the Assessing Officer to grant stay of demand once the assessee pays 15 per cent of the disputed demand while the appeal is pending before Commissioner of Income Tax (Appeals).
Shri Jaitley said that the monetary limit for deciding an appeal by a single member Bench of ITAT will be enhanced from Rs15 lakh to Rs50 lakh. He also announced creation of 11 new Benches of Customs, Excise and Service Tax, Appellate Tribunal (CESTAT) to remove backlog of cases.