Circular No. RB/CIR/OTC-IDS/1404A

What this is

Circular No. RB/CIR/OTC-IDS/1404A was issued by the Central Board of Direct Taxes on 25 November 2016. Its subject is Income Declaration Scheme 2016 – Grievance regarding non-acceptance by banks of payments under IDS, 2016 through ITNS-286.

What it does

Tells member banks to keep accepting payments under the Income Declaration Scheme, 2016 after the scheme's declaration date had passed. It forwards a Reserve Bank communication of 23 November 2016 and an Office Memorandum of the Board, F.No.142/8/2016-TPL (Part) dated 10 November 2016, and records the complaint that branches were refusing challans on the footing that the scheme closed on 30 September 2016. The Office Memorandum sets a revised payment schedule: at least twenty five per cent of the tax, surcharge and penalty by 30 November 2016, a further twenty five per cent by 31 March 2017, and the balance on or before 30 September 2017. Banks are accordingly asked to accept payments up to 30 September 2017 and not to ask for the source of funds in these cases. The appended earlier circular of 11 November 2016 records the Reserve Bank's direction of 8 September 2016 that banks must invariably accept cash over the counter, whatever the amount, from declarants paying by the scheme's challan, and that while customer identification under the know your customer rules is necessary, banks are not to seek the source of funds for such cash deposits, the declarations being confidential.

Why it was issued

Complaints were received that bank branches were refusing scheme challans because the declaration date had passed, and that branches were insisting on knowing the source of cash, which cut against the Government's policy of keeping declarations under the scheme confidential.

Who it reaches

• Declarants under the Income Declaration Scheme, 2016 paying in instalments
• Bank branches receiving the scheme's challan
• Declarants paying in cash over the counter

The instrument, as the Board published it

No.RB/CIR/OTC-IDS/1404A November 25, 2016 The Chief Executives of All Member Banks Dear Sir/Madam, Income Declaration Scheme 2016 – Grievance regarding non-acceptance by banks of payments under IDS, 2016 through ITNS-286 We have received a communication dated November 23, 2016 from RBI on the captioned subject along with the Office Memorandum F.No.142/8/2016-TPL (Part) dated November 10, 2016 by the GOI, MOF, Department of Revenue, CBDT [copy enclosed]. It has been alleged that the bank authorities are refusing to accept payment stating that since IDS, 2016 has closed on 30.092016 the banks cannot accept the challan beyond the date. The Office Memorandum mentions about the revised Schedule for Making Payments of tax, surcharge and penalty: (i) a minimum amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016; (ii) a further amount of 25% of the tax, surcharge and penalty to be paid by 31.3.2017; and (iii) the balance amount to be paid on or before 30.9.2017. Accordingly, all the member banks are requested to make note of the above time schedule and as directed accept payments under IDS, 2016 upto 30.09.2017 and also for such cases the banks should not seek source of funds. [Kindly refer our appended circular in this regard] We request you to sensitise your branches accordingly. Yours faithfully, K Unnikrishnan Chief Executive (Offg) World Trade Centre, 6th Floor, Centre 1 Bldg., World Trade Centre Complex, Cuffe Parade, Mumbai - 400 005. Phone: 22174040, Fax: 22184222 E-mail: webmaster@iba.org.in website : www.iba.org.in URGENT No.RB/CIR/OTC-IDS/1404 November 11, 2016 The Chief Executives of All Member Banks Dear Sir/Madam, Acceptance of Cash over the Counter – Income Declaration Scheme 2016 The Reserve Bank of India (RBI) has issued a Cir.DBR.No.Leg.BC 8/09.07.005/2016-17 dated 8th September 2016 where in RBI has advised that banks must invariably accept cash, irrespective of amount, over the counters from all declarants who desire to deposit cash at the counters including deposits under the Income Declaration Scheme 2016 through ITNS Challan – 286. In this connection, RBI has brought to the notice of IBA that Government has expressed concern that banks are not following direction issued by RBI in relations to deposit of cash and are insisting that depositors should disclose the source of cash deposit. This is against the decided Policy of the Government to keep the declarations made under IDS 2016 confidential. All the member banks are requested to sensitize their branches to ensure that while identification of customers and walk-in-customers is necessary as per KYC instructions contained in the Master Direction – KYC Circular DBR.AML.BC.No.81/14.01,001/2015-16 dated 25th February 2016, banks should not seek sources of funds for cash deposits under IDS-2016. Yours faithfully, K Unnikrishnan Chief Executive (Offg) World Trade Centre, 6th Floor, Centre 1 Bldg., World Trade Centre Complex, Cuffe Parade, Mumbai - 400 005. Phone: 22174040, Fax: 22184222 E-mail: webmaster@iba.org.in website : www.iba.org.in

What to watch

• This is a banking association circular passing on the Reserve Bank's and the Board's instructions; the operative instalment schedule is in the Board's Office Memorandum, which is what should be cited.
• The closing date for a declaration and the last date for payment are different things - that is the whole point of the instruction, and it is why the 30 September 2016 refusal was wrong.
• Not seeking the source of funds does not displace customer identification under the know your customer rules, which the circular expressly preserves.
• All three payment dates have passed; the document now matters only in testing a payment made in that period.

Where you meet it

Where a declarant's instalment under the scheme was refused at the counter, or where a payment made after September 2016 is said to be out of time.

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