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Income Declaration Scheme - 2016 Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM TAX INTERVIEW QUESTIONS INCOME DECLARATION SCHEME - 2016 INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Income Declaration Scheme - 2016 Interview Questions & Answers - Learning Mode

Income Declaration Scheme 2016 came into effect from 1 June, 2016. It's an opportunity for those who didn't disclose income or pay taxes thereon in the past. Under this scheme, such persons can declare the undisclosed income and pay tax, surcharge and penalty on the declared undisclosed income. Declaration of undisclosed income or asset should have been chargeable to tax for any assessment year prior to the assessment year 2017-18. The person making a declaration under the scheme will have to pay income tax at the rate of 30% of the value of undisclosed income plus a surcharge of 25% thereon. Additionally, the person will be liable to pay a penalty at the rate of 25% of the tax, which would make the total payment 45% of the undisclosed income.

Try Income Declaration Scheme - 2016 Interview Questions & Answers - Exam Mode

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Income Declaration Scheme - 2016 Interview Questions & Answers - Learning Mode
Try Income Declaration Scheme - 2016 Interview Questions & Answers - Exam Mode
Question: Will the declarations made under the Scheme be kept Confidential?

Answer: The Scheme incorporates the provisions of section 138 of the Income-tax Act relating to disclosure of information in respect of assessees. Therefore, the information in respect of declaration made is confidential as in the case of return of income filed by assessees. Source: CoolInterview.com
Question: What is Income Declaration Scheme 2016? What are its main features?

Answer: 1. Income Declaration Scheme 2016 came into effect from 1 June, 2016. It's an opportunity for those who didn't disclose income or pay taxes thereon in the past.

2. Under this scheme, such persons can declare the undisclosed income and pay tax, surcharge and penalty on the declared undisclosed income.

3. Declaration of undisclosed income or asset should have been chargeable to tax for any assessment year prior to the assessment year 2017-18.

4. The person making a dec Source: CoolInterview.com
Question: Can a person against whom a search/ survey operation has been initiated file declaration under the Scheme?

Answer: (a) The person is not eligible to make a declaration under the Scheme if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued. In this case, however, the person is eligible to file a declaration in respect of an undisclosed income in relation to an assessment year which is prior to assessment years relevant for the purpose of notice under section 153A.

(b) In case of su Source: CoolInterview.com
Question: If a person declares only a part of his undisclosed income under the Scheme, then will he get immunity under the Scheme in respect of the part income declared?

Answer: It is expected that one should declare all his undisclosed income. However, in such a case the person will get immunity as per the provisions of the Scheme in respect of the undisclosed income declared under the Scheme and no immunity will be available in respect of the undisclosed income which is not declared. Source: CoolInterview.com
Question: Where a notice under section 142(1)/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year will he be ineligible from making a declaration under the Scheme?

Answer: The person will only be ineligible from declaration for those assessment years for which a notice under section 142(1)/143(2)/148/153A/153C is issued and the proceeding is pending before the Assessing Officer. He is free to declare undisclosed income for other years for which no notice under above referred sections has been issued.​ Source: CoolInterview.com
Question: Whether at the time of declaration under the Scheme, will the Principal Commissioner/Commissioner do any inquiry in respect of the declaration made?

Answer: After the declaration is made the Principal Commissioner/ Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other inquiry will be conducted by him at the time of declaration. Source: CoolInterview.com
Question: Can a person declare under the Scheme his undisclosed income which has been acquired from money earned through corruption?

Answer: No. As per section 196(b) of the Finance Act, 2016, the Scheme shall not apply, inter-alia, in relation to prosecution of any offence punishable under the Prevention of Corruption Act, 1988. Therefore, declaration of such undisclosed income cannot be made under the Scheme. However, if such a declaration is made and in an event it is found that the income represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 193 o Source: CoolInterview.com
Question: Where a search/ survey operation was conducted and a notice has not been issued, can Such undisclosed income be declared under Income Declaration Scheme (IDS) 2016?

Answer: Yes, such undisclosed income can be declared under the Scheme. Source: CoolInterview.com
Question: If a declaration of undisclosed income is made under the Scheme and the same was found ineligible due to the reasons listed in section 196 of the Finance Act, 2016, then will the person be liable for consequences under section 197(c) of the Finance Act, 2016?

Answer: In respect of such undisclosed income which has been duly declared in good faith but not found eligible, then such income shall not be hit by section 197(c) of the Finance Act, 2016. However, such undisclosed income may be assessed under the normal provisions of the Income-tax Act, 1961. Source: CoolInterview.com
Question: As per the Scheme, declaration cannot be made where an undisclosed asset has been acquired during any previous year relevant to an assessment year for which a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued. If the notice has been issued but not served on the declarant then how will he come to know whether the notice has been issued?

Answer: The declarant will not be eligible for declaration under the Scheme where the undisclosed income relates to the assessment year where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued and served on the declarant on or before 31st day of May, 2016. The declarant is required to file a declaration regarding receipt of any such notice in Form-1. Source: CoolInterview.com
Question: In a case where the undisclosed income is represented in the form of investment in asset and such asset is partly from income that has been assessed to tax earlier, then what shall be the method of computation of undisclosed income represented by such undisclosed asset for the purposes of the Scheme?

Answer: As per sub-rule (2) of rule 3 of the Income Declaration Scheme Rules, 2016, where investment in any asset is partly from an income which has been assessed to tax, the undisclosed income represented in form of such asset will be the fair market value of the asset determined in accordance with sub-rule (1) of rule 3 as reduced by an amount which bears to the value of the asset as on the 1.6.2016, the same proportion as the assessed income bears to the total cost of the asset.

This is illus Source: CoolInterview.com
Question: Can a declaration be made of undisclosed income which has been assessed to tax and the case is pending before an Appellate Authority?

Answer: As per section 189 of the Finance Act, 2016, the declarant is not entitled to re-open any assessment or reassessment made under the Income-tax Act. Therefore, he is not entitled to avail the tax compliance in respect of such income. However, he can declare other undisclosed income for the said assessment year which has not been assessed under the Income-tax Act. Source: CoolInterview.com
Question: What are the consequences if no declaration under the Scheme is made in respect of undisclosed income prior to the commencement of the Scheme?

Answer: As per section 197(c) of the Finance Act, 2016, where any income has accrued or arisen or received or any asset has been acquired out of such income prior to the commencement of the Scheme and no declaration is made under the Scheme, then such income shall be deemed to have been accrued, arisen or received or the value of the asset acquired out of such income shall be deemed to have been acquired in the year in which a notice under section 142/143(2)/148/153A/153C is issued by the Assessing Offi Source: CoolInterview.com
Question: Where an undisclosed income in the form of investment in asset is declared under the Scheme and tax, surcharge and penalty is paid on the fair market value of the asset as on 01.06.2016, then will the declarant be liable for capital gains on sale of such asset in the future? If yes, then how will the capital gains in such case be computed?​​

Answer: Yes, the declarant will be liable for capital gains under the Income-tax Act on sale of such asset in future. As per the current provisions of the Income-tax Act, the capital gains is computed by deducting cost of acquisition from the sale price. However, since the asset will be taxed at its fair market value the cost of acquisition for the purpose of Capital Gains shall be the fair market value as on 01.06.2016 and the period of holding shall start from the said date (i.e. the date of determina Source: CoolInterview.com
Question: Is it necessary to file a valuation report of an undisclosed income represented in the form of investment in asset along with the declaration under the Scheme?

Answer: It is not mandatory to file the valuation report of the undisclosed income represented in the form of investment in asset along with the declaration. However, the declarant should have the valuation report. While e-filing the declaration on the departmental website a facility for uploading the documents will be available. Source: CoolInterview.com

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