Section 49(5) - Cost of Acquisition - Income Declaration Scheme, 2016

• Income Declaration Scheme, 2016 was introduced by the government in 2016 which provided an opportunity to the people to disclose their undisclosed income voluntarily and pay tax, surcharge, penalty in total @ 45% of such undisclosed income declared.

• Likewise, people can also declare asset which were acquired by way of such undisclosed income and pay tax, surcharge, penalty in total @45% of the Fair Market Value of such asset.

• IDS 2016 was applicable for 4 months from 01/06/2016 to 30/09/2016.

• As per section 49(5) of the Income Tax Act 1961, where capital gain arises from transfer of asset declared under the Income Declaration Scheme 2016, the cost of acquisition of such asset shall be the FMV of the asset which was taken into consideration for the purpose of IDS.

• The period of holding shall be determined as follows :

• In case of immovable property, the period shall be reckoned from the date of acquisition of property if such date is evidenced by registered deed.

• In any other case, the period shall be reckoned from 01/06/2016.