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In 2016, Narendra Modi led government introduced the Income Tax Declaration Scheme in India to uncover black money and to persuade tax evaders to file Income Tax Returns on their earnings. As per the scheme, individuals who haven’t revealed their actual assets or income to the government in the previous tax assessment year can do so and in turn, instead of the hefty defaulter’s penalty fees, they can pay a discounted tax of 45%.
In case if a company or an individual is caught red-handed by the government for concealed assets then the total of that asset will be added to the income tax slab and the defaulter will also have to pay a hefty fine.
Tax evasion causes huge loses to a nation’s economy as it deprives the government of resources which could have been otherwise utilized in undertaking developmental projects or for providing its citizens with the basic needs. When an Indian citizen fails to pay his/her taxes the undesirable burden falls upon all the regular tax payers who are levied with higher taxes to compensate for the revenue crunch.
The Income Tax Declaration Scheme suggests that, a defaulter will not be able to utilize this scheme if they have been issued a notice by the Tax Department or Authorities. The notices served could be in relation to evaluation of the tax evader by the tax department, reassessment proceeding or any such proceedings that are pending.
Section 2(31) of the Income Tax Act identifies certain eligibility criteria for Income Tax Declaration Scheme.
It also categorises the authorized representative for making the declaration on behalf of the claimant on special cases
All these categories of entities can declare for additional income till the assessment year of 2016-17, through Income Declaration Scheme. Taxpayers who have made the declarations would be exempted from inspections, reassessments by the tax authority or from being enquired and prosecuted.
The introduction of Income Declaration Scheme is a way of offering pardon to tax defaulters, offering a chance to come forward with the facts. This scheme does not provide complete immunity to defaulters it offers a cut-down on the tax penalties levied upon the defaulters.
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