What is Tax Amnesty Scheme?

Recently, North Delhi Mayor Jai Prakash announced that the New Delhi Municipal Council (NDMC) has rolled out a property tax amnesty scheme so as to provide relief to the residents of unauthorised regularised colonies.

Key Highlights

  • According to the scheme, all the outstanding tax prior to the financial year 2019-20 would  be exempted  if the taxpayer of residential properties in such colonies pays property tax for the financial years 2019-20 and 2020-21.
  • In the case of non-residential properties.  if a tax payer pays outstanding property tax of the last three financial years and of the current year i.e., of 2017-18, 2018-19, 2019-20 and 2020-21, his or her property tax for the period prior to it i.e., before 2017 would be exempted.
  • The benefit under the scheme will be available only on filing of property tax return and making the payment of the aforesaid tax dues, without any interest and penalty.
  • Scheme is valid only till October 31.

Tax Amnesty

It is a limited-time opportunity for some taxpayers in order to pay a defined amount, in exchange for forgiveness of a tax liability including interest and penalties related the previous tax period without fear of criminal prosecution. The scheme expires when some authority begins a tax investigation of the past-due tax. It is a voluntary compliance strategies in order to increase tax base and tax revenue. The main purpose of the scheme is to replicate the economy and encouraging individuals and corporations to declare their wealth.

Tax Amnesty in India

India in 2016 has run one of the biggest Tax Amnesty scheme called the  IDS,2016 in the world. The scheme is one of the component of Sabka Viswas scheme. Through the scheme, India gather around $4 billion as taxes in 4 months.

Sabka Vishwas Scheme

The scheme is a dispute resolution scheme notified by Government in order to close the pending disputes related to the Service Tax and Central Excise cases. It operationalised from 1st September 2019. The main components of the Scheme are dispute resolution and amnesty.

  1. Dispute resolution component  which aims to liquidate the legacy cases of Central Excise and Service Tax subsumed in GST.
  2. Amnesty component of the Scheme which offers an opportunity to the taxpayers to pay the outstanding tax.

The primary objective of the scheme is to free the large number of small taxpayers from their pending disputes with the tax administration.