Income declaration scheme 2016 came into force in 1st June, 2016. Mostly people think that income taxes are meant for taking a large piece out of their salary. In this tax declaration has chiefly prioritized fair market value. During his Independence Day speech PM Modi assured to end income tax fear from middle income group people. Many rich people who prepared to acknowledge their nameless holdings of stocks as well as real estate and gold under IDS to breathe a shy of relief, can now outlive those assets at least for some more time. As per the tax consultant team the fear 45% tax and penalty are making these people holding on their asset for a year or so for availing tax benefit.
Under IDS any taxpayer unveils any asset purchased with unaccounted money, 1St June 2016 onwards the value of this property will be calculated to determine the tax and penalty irrespective of the value and the exact acquisition time of the asset. Yet Govt. hasn’t raised the curtain off the specific duration of holding these assets after paying the tax under IDS and that offers some margin. Value of few stocks and gold were on the low octave around June, but they started laddering up after the time of IDS came up with the rules and this will be continuously crawling up from here on. Thus there is a breeding expectation among the taxpayers that the effective tax would rig out to be less than 45% if the worth of the assets at a larger stage is taken into account. For instance- if any individual person holds share values around 1 crore in the month of June then the accounted tax will be 45 lacs under IDS. Now if clears his tax but holds on to the shares for some more time to sell them when the valuation exceeds Rs. 1 crore, he has to pay the same 45 lacs tax which is 30% of the sale value.
This is no longer illegal as Indian Govt. hasn’t come up with any regulation around this. Any taxpayer can declare his asset and can pay at 45% tax on the same and also choose to sell these assets later on. Although the revenue dept. yet to determine the time period of holding these assets. The revenue dept. and Central Board of Direct Tax hasn’t responded so far to an email seeking statement. This occurred when the income tax dept. has begun issuing notices to those people who earned a lump sum amount via trading in penny stocks. Though the latest report says that- the tax dept. has started issuing notice to 1000 individual but the total number of notices hasn’t been verified yet. These tax notices are sent based on an analysis done by the revenue dept. and the Central Board of Tax and this analysis was based on the data obtained through market regulator Securities and Exchange Board of India.
Source– LNN (Liyans News Network)