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Income tax Informants Scheme 2018

The government has promulgated a scheme to reward informants who are willing and able to share specific intelligence with the tax authorities. Under the scheme the authorities have proposed a financial reward of up to Rs 5 crore rupees to actionable intelligence that leads to a direct recovery of undisclosed foreign incomes and assets, undisclosed local incomes and assets and benami properties.

To avail the scheme any person in the with credible information can approach local DGIT/PDIT/JDit whereby he/she will be required to furnish information in a specified format called Annexure -A this information will have to be supplied in person by local residents. Non residents however can furnish this information by email.

Post receipt of such information, an informant code is to be allotted to the individuals and their identities are to be kept secret at all times.

False information

The scheme adds a cursory line to specify that furnishing false information is an offence and any informants giving such information under the Income tax Informants Scheme 2018 shall be prosecuted. it does not however specify any additional measures that may dissuade people from filing information to settle scores or to cause undue harassment.

Rewards

In terms of rewards, the scheme proposed rewards as per the following structure :

Interim Reward

Particulars Reward %age Ceiling
Information on undisclosed foreign income/assets under Black Money (undisclosed foreign incomes and assets) act, 2015 3% of additional taxes levied (directly attributable to information provided) Rs 5 million
Information on undisclosed incomes/assets under Income tax act 1961 1% of additional taxes levied (directly attributable to information provided) Rs 1 million

Rs 1.5 million ( where information leads to seizure of cash in excess of Rs 10 million)

 

Final Reward

Particulars Reward %age Ceiling
Information on undisclosed foreign income/assets under Black Money (undisclosed foreign incomes and assets) act, 2015 10% of additional taxes levied (directly attributable to information provided) Rs 50 million
Information on undisclosed incomes/assets under Income tax act 1961 5% of additional taxes levied (directly attributable to information provided) Rs 5 million

Rs 10million

( where information leads to reward also under Benami Transaction informants reward Scheme)

 

Points to ponder

  • The scheme has left substantial subjectivity in the grant or withholding of such awards. The information provided has to be extremely specific and should be actionable leading directly to recoveries and collection of taxes. Mere disclosure of modus operandi will not qualify for reward under the Income tax Informants Scheme even if it leads to recovery of information and collection of tax by the government.
  • While the scheme excludes government employees it does not exclude their relatives from availing this scheme.
  • The scheme does not offer any immunity from prosecution to informants who may have been involved in the aggregation of such black money or undisclosed property.
  • Since the rewards are in nature of “ex-gratia” payments they cannot be litigated for, there is however a review process which aggrieved informants can pursue.

 

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