A number of budgetary proposals, including four-month disclosure scheme for domestic black money holders to come clean, will kick in from June 1.
The four-month Income Declaration Scheme provides one time opportunity to domestic black money holders to come clean by paying tax and penalty of 45% on such assets. However, the scheme is not meant for those who have earned money through corruption.
Last year, the government had launched a similar scheme giving opportunity to people having unaccounted assets abroad to come clean by paying taxes and penalty.
The Equalisation levy of 6% on cross border digital transactions and a one-time settlement tax scheme for resolving disputes emanating from retrospective amendments to the Income Tax Act will also come into effect from Wednesday.
The Equalisation levy or ‘Google tax’ in common parlance will apply only on payments relating to online advertisements. Last month, Internet and Mobile Association of India (IAMAI) had said that levy on online advertisement revenue of foreign companies would “severely raise the cost of doing business” for Indian tech startups.
Direct Tax Resolutions
Another major budgetary proposal, the Direct Tax Dispute Resolution Scheme, which seeks to resolve cases pending in various courts, tribunals, arbitrations are in mediation under the Bilateral Investment Protection Agreement (BIPA), will come into effect from June 1.
The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, by asking companies to pay the basic tax demand and get waiver on interest and penalty.
Experts hailed the scheme as a big step towards tax reform and hope that it would act as a breather for companies like Vodafone and Cairn, which have been facing multi-billion dollar tax liability following retrospective tax amendments made in 2012.