Large deposits made during Income Declaration Scheme (IDS) of the Modi govt is going to get hurt real bad. IDS more tricky and twisted than you can think. If you have unaccounted income, which you have deposited, you would be required to show all paperwork in support of it. Merely saying them as income from business or agriculture won’t really solve the issue.
And if you can’t provide proof of the income or making false claims, it would be taxed upto 85%. Keeping in mind the likelihood of tight scrutiny and the penal tax rate of about 85%, chartered accountants said, it would be wise to come clean under the newly announced Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016.
Under this scheme, the undeclared income would be taxes up to 50% and half of the amount would be locked for four years in interest-free fixed deposits. As there is no tax on incomes from agriculture, deposits made in this category will be scrutinised strictly.
The recently amended income tax Act requires all 'farmers' claiming exemption to produce mandi receipts for sale of their produce. To declare agricultural income, a person now needs to submit a certificate from the gram sevak and circle officer of their area stating the sowed acreage, purchase receipts of seeds and fertilisers, and also sale receipts. Businesses claiming a spurt in sales to explain their large deposits will also have to show higher sales tax and service tax payouts as evidence. If their documents are in order, they will need to pay tax at the usual rate of 35%. But all of these supporting documents are hard to get retrospectively, Vivek Jain, a senior chartered accountant told The Times of India.