Circular No. 25/2016

Clarifications on the income declaration scheme 2016

What this is

Circular No. 25/2016 was issued by the Central Board of Direct Taxes on 30 June 2016. Its subject is Clarifications on the income declaration scheme 2016.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

A further set of clarifications on the Income Declaration Scheme, 2016, after the 14 answers in Circular No. 17/2016 dated 20 May 2016 and the 11 in Circular No. 24/2016 dated 27 June 2016. On confidentiality, the Board states that the information in a declaration will not be shared with any other law enforcement agency, and will not be shared even within the Income-tax Department for any investigation in respect of a valid declaration. On immunity, the Scheme gives immunity under the Income-tax Act, 1961, the Wealth-tax Act, 1957 and the Benami Transactions (Prohibition) Act, 1988; the immunity under the last of these is conditional on the property being transferred to the declarant — meaning the person who provided the consideration for it — by 30 September 2017 at the latest. It does not extend to other economic laws such as service tax, value added tax, the Companies Act or the securities regulator's legislation, though the Board's answer adds that in any event the information will not be shared with any other tax or law enforcement agency.

Why it was issued

Further queries were received from the public about various provisions of the Scheme after the two earlier sets of clarifications.

Who it reaches

Persons considering a declaration under the Income Declaration Scheme, 2016
Declarants holding property in a benamidar's name
Declarants with exposure under indirect tax or corporate law on the same money
Advisers weighing the confidentiality of a declaration

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it. The reading also stopped short of the end of the document: what is below is the opening, not the whole of it.

Page 1 of 5
Circular No.25 of 2016
F.No.142/8/2016-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
***
Dated 30th of June, 2016
Clarifications on the Income Declaration Scheme, 2016
The Income Declaration Scheme, 2016 (hereinafter referred to as 'the Scheme')
incorporated as Chapter IX of the Finance Act, 2016 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 45% of such undisclosed income
declared. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as 'the IDS
Rules') have been notified. In this regard, Circular No. 17 of 2016 dated 20th May, 2016 and
Circular No. 24 of 2016 dated 27th June, 2016 issued by the Board provided clarifications to
14 and 11 queries respectively. Subsequently, further queries have been received from the
public about various provisions of the Scheme. The Board has considered the same and
the following clarifications are issued.-
Question No.1: Will the information contained in the declaration be shared with
other law enforcement agencies?
Answer: No; the information contained in the declaration shall not be shared
with any other law enforcement agency. The information will also
not be shared within the Income Tax Department for any
investigation in respect of a valid declaration.
Question No.2: Whether immunity will be provided under other economic laws
including Service Tax, VAT, Companies Act, SEBI Act & regulations
etc.?
Answer: The Scheme provides immunity under the Income-tax Act, 1961, the
Wealth-tax Act, 1957 and the Benami Transactions (Prohibition) Act,
1988. Immunity from Benami Transactions (Prohibition) Act is subject
to the condition that the property will be transferred to the declarant
(being the person who provided the consideration for the property)
latest by 30th September, 2017. However, as mentioned in response
to Question No.1 above, the information contained in the declaration
Page 2 of 5
made under the Scheme will not be shared with any other tax or law
enforcement agency.

What to watch

Immunity reaches three Acts only — income-tax, wealth-tax and the benami legislation. Service tax, value added tax, company law and securities law liabilities are untouched.
The benami immunity was conditional on transferring the property to the declarant by 30 September 2017; that date has long passed, and the condition either was met then or was not.
The protection on other laws is practical rather than legal — the Board undertakes not to share the information, not that no liability arises.
The extract carries only the first two answers of a five-page circular, so the remaining clarifications are not before you.

Where you meet it

In a benami or other proceeding where a declaration under the Scheme is set up as the explanation for an asset, and wherever the confidentiality of a declaration is questioned.

What it names

It mentions. Circular No. 17/2016, Circular No. 24/2016, Circular No. 25/2016

← Circular No. 26/2016 · Circular No. 24 /2016 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.