New Delhi: Providing a window to black money holders, the government Monday proposed to levy a total tax, penalty and surcharge of 50 percent on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85 percent await those who don't disclose but are caught.
Nearly three weeks after Prime Minister Narendra Modi announced junking high denomination Rs 500 and Rs 1,000 notes, Finance Minister Arun Jaitley introduced a bill to amend the Income Tax law which also provides for black money declarants a mandatorily depositing of 25 percent of the amount disclosed in anti-poverty scheme without interest and a four-year lock-in period.
Those who choose to declare their ill-gotten wealth stashed till now in banned Rs 500 and Rs 1,000 notes under the Pradhan Mantri Garib Kalyan Yojana 2016, will have to pay a tax at the rate of 30 percent of the undisclosed income.
Additionally, a 10 percent penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33 percent of tax (33 percent of 30 percent).
Further, the declarants have to deposit 25 percent of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).
The money from the scheme would be used for projects in irrigation, housing, toilets, infrastructure, primary education primary health and livelihood so that there is justice and equality, said the Statement of Objects and Reasons of the Bill.
For those who continue to hold onto undisclosed cash and are caught, existing provisions of the Income Tax law will be amended to provide for a flat 60 percent tax plus a surcharge of 25 percent of tax (15 percent), which will amount a levy of 75 percent.
Besides, if the assessing officer decides he can charge a 10 percent penalty in addition to the 75 percent tax.
The current provisions of penalty on under-reporting of income at 50 percent of the tax, and misreporting (200 percent of tax) will remain and no changes are being made to them.
Under-reporting/misreporting income is normally difference between returned income and assessed income.
The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115BBE of the Income Tax Act to provide for a punitive tax, surcharge and penalty on unexplained credit, investment, cash and other assets.
Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50 percent tax, surcharge and penalty, a quarter of the declared income will be to be deposited in interest free deposit scheme for four years.
Revenue Secretary Hasmukh Adhia said the deterrent provisions were necessary so that people have the fear of hoarding black money.
"The disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund. It would ensure immunity from wealth tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics, and black money act," he said.
Deposits which have been already made from November 10 will be covered under PMGKY. "Last date we will notify after the bill is passed but it is likely to be 30 December. PMGKY will come in as a new Chapter 9 in Finance Act 2016," he said.
Published Date: Nov 28, 2016 06:48 pm | Updated Date: Nov 28, 2016 06:48 pm