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Income Tax Reward Scheme

To encourage prompt payment of taxes, the Government of India has come up with an initiative known as ‘Benami Transactions Informants Reward Scheme’, which is aimed at significantly rewarding the common man for reporting acts of tax evasion to the Income Tax Department. This article is an overview of the Income Tax Reward Scheme scheme.

Income Tax Informants Reward Scheme

The Income Tax Informants Reward scheme intends to incentivize a person for revealing specific information in the prescribed manner to the Joint or Additional Commissioners of Benami Prohibition Units (BPUs) of the Investigation Directorates of Income Tax Department. The information can relate to Benami transactions and properties and proceeds from the properties which are accumulated out of unaccounted wealth. The reward accorded to the person reporting the unreported income could range up to Rs 1 crore. On the other hand, for disclosing information pertaining to black money held abroad, the concerned person may be rewarded with a sum that could range up to Rs five crores. The detailed procedure pertaining to Income Tax Informants Reward Scheme, 2018 is reproduced below for reference:

Income Tax Informants Reward Scheme

Benami Property

Benami property is a property that has been illegally purchased and held by an assessee. Benami property refers to a property which has been procured by a person using some other name, which may even include the person’s spouse or child.

Confidentiality

The Income Tax Department has clearly stated that the identity of the discloser of the information will be hidden from the purview of the public, thereby preserving the rights of confidentiality of the discloser.

Salient Features of the Scheme

The following are the highlights of the various aspects of the scheme:

• The reporter of a Benami transaction will be awarded a sum that could go up to Rs one crore. The person making a disclosure to the Income Tax department may even be awarded a sum ranging up to Rs 5 crores for reporting the maintenance of black money abroad.
• The scheme contains no clause of amnesty to any benamindar who chooses to be an ‘informant’.
• The scheme is not applicable to government servants, which means that they wouldn’t be eligible to claim rewards for any disclosure of information.
• The scheme is extended to foreigners, the payments for whom will be processed by regular banking channels in accordance with the guidelines issued by the Reserve Bank of India.
• An interim reward can be accorded if, according to the informant’s specific information, the Benami property has been provisionally attached under Section 24(4) of the Act. The maximum ceiling of an amount of interim reward is Rs 10 lakhs for information pertaining to a single Benami property.
• The rewards can only be distributed after the Benami property has been confiscated under Section 27 of the Act, and after such confiscation has been declared as final in judicial proceedings subsequent to the passing of the order. It may be noted that the confiscation shall be deemed to be final upon the expiry of two years from the date of confiscation and there is no litigation pending on it.
• The competent authority is entitled to sanction interim rewards up to 1% of the fair market value of movable property provisionally attached and 1% of the circle rate of immovable property provisionally attached. Also, he/she may grant a final reward of up to 5% of the market value of movable property confiscated, and 5% of the circle rate of immovable property confiscated.

Proper Furnishing of Information

A person disclosing information will only be regarded as an informant if he/she furnishes specific information of substantial tax evasion in a written statement in a manner as prescribed. The scheme is not eligible for those who wish to share the information through a letter, e-mail, CD, SMS, phone, social networking, publishing in a newspaper; and so on.

The informant’s Aadhar number must be quoted in the Annexure-A form, and a copy of the Aadhar card must be attached with the form. Non-residents are allowed to mention their passport number as they wouldn’t be holding an Aadhar card. The information must be supported by substantial evidence. Furnishing false information would result in consequences as stipulated under the Indian penal code.

Form for furnishing information under the Income Tax Reward Scheme is reproduced below for reference:

Income Tax Reward Scheme Application Form

Grievance Redressal

Grievances with respect to the allotment of informant code must be addressed with the PDITIDIT (Inv) concerned, whose discretion will be considered final. For issues pertaining to non-payment or reduced payment of final reward, the informant is empowered to file a review petition on the existence of grave injustice in the decision of the competent authority owing to either non-adherence to the Reward Scheme issued by the Board or any factual inaccuracies. The review petitions must be filed within a month of the date of the decision of the competent authority.