CA Umesh Sharma

CA Umesh SharmaArjuna (Fictional Character): Krishna, Football lovers know the missed penalty kick by famous football player Messi and its impact on him. Further he has been punished for tax evasion in his country. Recently Income Tax Department had posted advt. of Foot Ball Goal and Income Declaration Scheme, 2016. So as to avoid such a situation, in a taxpayer’s life, how should he play with the tax law while doing business in India?

Krishna (Fictional Character): Arjuna, wow, Like in Football and Tax laws, The Goal Post and Football ground are the Boundaries i.e., Act and Rules of Tax Laws, The Football Player is the Tax Payer, The Referee is the Tax Authority and The Ball is the Income. Hence the Football kicked in Goal Post is only the Valid Goal, like wise Income which in as per the Tax laws is the Disclosed Income. Football kicked out of Goal post and Income out of Tax laws is always punished. Messi had his chance to win the football game, but he lost this chance and retired from the game to regret the step taken by him. Also, he has to face imprisonment for two years for tax evasion in his country. For taxpayers in India, the government has given a chance till 30th September 2016 by introducing various schemes in all tax laws to rectify the mistakes done knowingly or unknowingly. Taxpayers should take benefit of these schemes otherwise they will have to regret like Messi.

Messi MessupArjuna (Fictional Character): Krishna, what can a taxpayer do to avoid the situation faced by Messi in the game of Income Tax?

Krishna (Fictional Character): Arjuna, a red card is the signal shown to take someone out of the football game. Likewise Survey and Raid are conducted on tax evaders. Now, the government has brought various schemes so that the same thing does not happen in income tax.

  1. Income Declaration Scheme, 2016: This scheme has been brought up by the government to declare undisclosed investment or income in the country. If specified 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. 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. Other Conditions needs to be followed. Thus it’s a golden chance to avoid Red Card from Tax department. Due to New Information Technology usages, Authorities can track the moves of Tax Payers through PAN CARDS, like the Cameras on the playground keep track on the moves of the players and RED CARDS are issued for arrogant players.
  2. Dispute Resolution Scheme, 2016: To settle old disputes related to income tax, government has come up with Direct Tax Dispute Resolution Scheme. If the disputed amount is equal to 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.  Other Conditions needs to follow to avail it.

Arjuna (Fictional Character): Krishna, what should be done so as to avoid the situation faced by Messi in the game of Indirect Tax?

Krishna (Fictional Character): Arjuna, many-a-times conflicts between the football players arise. Many such conflicts are solved then and there only. Similarly, 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.

lionel-messi

Arjuna (Fictional Character): Krishna, what should be done so as to avoid the situation faced by Messi in the game of VAT?

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, what should be done so as to avoid the situation faced by Messi in the game of Profession Tax in Maharashtra State?

Krishna (Fictional Character): Arjuna, if some mistake is done intentionally in football, the referee shows a yellow card. In the same way, the government has brought a scheme in the law of Profession Tax by showing a yellow card. “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 after taking registration had to pay profession tax for the period of 8 years along with the interest and penalty as applicable. But now the person can take 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 it has not been followed then one should take 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 in all circulars, advertisements, speeches. Otherwise it is being said that the consequences will be the worst. That is why, the taxpayers should not do what Messi did and they should carefully take benefit of these schemes so that they do not have to regret later. Tax payer should not play with tax laws, authorities should not unnecessarily penalize honest tax payers and Government should reward the honest tax payer. ‘Play safe, Pay tax’ is the mantra in Business life.        

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