CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, we are celebrating 70th Independence Day of our nation. But do our nation’s taxpayers have independence? And how will they get it?

Krishna (Fictional Character): Arjuna, our Indian Constitution has given freedom of speech, residence, etc. to every citizen. Similarly, following the tax laws is also mentioned in the constitution. Every taxpayer should follow the tax laws applicable to him. But sometimes it happens that the taxpayer evades tax, commits an error while maintaining books, or he may misunderstand a provision of law or there are disputes on certain provisions. The consequences of these are that the taxpayer has to pay a lot of penalty and interest, go through a lot of mental stress and he feels that he has lost his freedom. That is why, the government has brought various schemes under various central and state tax laws so as to provide an opportunity to taxpayers to correct their mistakes. A taxpayer can be independent by utilizing these schemes.

Arjuna (Fictional Character): Krishna, when will a taxpayer get independence under income tax law?

Krishna (Fictional Character): Arjuna, under income tax law, to declare undisclosed income and to get rid of old disputes; the government has introduced various schemes. If they are utilized in proper way, then one can get independence.

  1. Income Declaration Scheme, 2016: This scheme has been brought up by the government to declare undisclosed investment or income in the country. If undisclosed income is declared under this scheme, then income tax at the rate of 30%, 7.5% surcharge and 7.5% penalty totaling 45% will have to be paid on such income. Under this scheme, taxpayer will have to pay minimum 25% tax, surcharge and penalty till 30th November 2016, 50% till 31st March 2017 and 100% till 30th September 2017. If there is undisclosed investment, then the fair market value of such investment as on 1st June 2016 shall be taken as its value. If this scheme is opted then such income will not be held for any punishment or prosecution proceedings. The declarant will be relieved from proceedings under the Benami Transactions Act, 1988. Also, no Wealth Tax will be levied for any of the previous years. Because of this, the taxpayer will be relieved from the stress of hiding income. Also he would not be required to get afraid from income tax officers.
  2. Dispute Resolution Scheme: To settle old disputes related to income tax, government has come up with Direct Tax Dispute Resolution Scheme. If the disputed amount is less than Rs.10 lakhs, then taxpayer will only have to pay income tax and interest and he will be relieved from penalty. Similarly, if such amount exceeds Rs.10 lakhs then tax, interest and 25% of the penalty will have to be paid thus taxpayer will get relieved from paying 75% of the penalty. That means, he will get completely rid from old disputes and get independence.

Arjuna (Fictional Character): Krishna, how will taxpayer get independence from indirect tax law?

Krishna (Fictional Character): Arjuna, the government has introduced Indirect Tax Dispute Resolution Scheme to settle the disputes related to Excise, Customs and Service Tax. If appeal is made to the commissioner, the same can be withdrawn and, then taxpayers can get relieved by paying tax, interest and 25% penalty. One needs to follow the conditions mentioned in the scheme to avail it.

Arjuna (Fictional Character): Krishna, can taxpayer get independence from VAT law?

Krishna (Fictional Character): Arjuna, to settle old disputes relating to 11 tax laws falling under sales tax department, a separate scheme called “Maharashtra Settlement of Arrears in Dispute Act, 2016” has been introduced.

  1. Where the arrears in disputes pertain to any assessment period ending on or before 31stMarch 2005, then the taxpayers paying tax will get full waiver of interest and penalty.
  2. Where the arrears in disputes pertain to any assessment period on and after 1stApril 2005 and ending up to 31st March 2012, then the taxpayers will have to pay whole amount of tax and 25% of interest i.e. 75% of interest and 100% penalty will be waived.

Arjuna (Fictional Character): Krishna, how will taxpayer get independence from profession tax law?

Krishna (Fictional Character): Arjuna, “Profession Tax Enrolment Amnesty Scheme, 2016” has been introduced for every unregistered person. Earlier, if a person has not done profession tax registration, then the person had to pay profession tax for the period of 8 years along with the interest and penalty as applicable after taking registration. But now the person can avail the benefit of the new Amnesty Scheme introduced, where, after taking registration the person has to pay profession tax only till 01/04/2013 which means he has to pay profession tax and interest only for 3 years. Also, no penalty will be levied.

Arjuna (Fictional Character): Krishna, what should one learn from all this?

Krishna (Fictional Character): Arjuna, the taxpayer should follow tax laws and should not play with it. If the law not followed, then one should avail the benefit of these schemes. The last date to participate in these schemes is 30th September. The government is bringing these schemes to the notice of people through circulars, advertisements, speeches. Otherwise it is being said that the consequences are going to be worse. That is why, there is a feeling of fear among the taxpayers everywhere. But government is on the way to settle old disputes as all these indirect taxes are going to get replaced by single tax called ‘Goods and Service Tax’. Therefore, one should avail the benefit from these schemes by remaining vigilant. Independence is a thing that has to be experienced by oneself. By doing wrong deeds, feeling of fear arises and a person’s mental and financial independence gets lost. In the attempt to earn a little, people choose the path of corruption and tax evasion. Due to this, penalty is levied, prosecution proceedings, etc. are conducted. It is recommended to follow the rules of the country of which we are citizen so as to be on a safer side. Otherwise, only our country is independent, but due to foreign investment and money, financial independence would not be achieved.

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