Finance Minister Arun Jaitley on Monday introduced a bill in the Lok Sabha to amend the Income Tax rules, levying a tax, penalty and surcharge of 50 percent on undisclosed income deposited post demonetization and around 85 percent on undeclared income unearthed by the tax department.
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.
Three weeks into the demonetization of Rs 500 and Rs 1000 notes, the government also introduced an income disclosure scheme, wherein those depositing black money will have to commit 25 percent of the total amount to an anti-poverty scheme without interest and a four-year lock-in period.
Under the scheme, called the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016, people can deposit money in their accounts till April 1, 2017, by paying 50 per cent of the total amount – 30 percent as tax, 10 percent as penalty and 33 percent of the taxed amount (10 percent of total amount) as Garib Kalyan Cess.
In addition, 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 remaining 25 percent will be available to the account holder.
This amount collected under the PMGKY scheme will be used for irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood-related projects.
Existing provisions of the Income Tax law will be amended for those who don’t declare any undisclosed amount but are caught.
Offenders will be liable to pay flat 60 percent tax plus a surcharge of 25 per cent of tax (15 percent), which will amount a levy of 75 percent.
The assessing officer can also charge a 10 percent penalty on top of it, taking the total surcharge to 85 percent.
“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,” said Revenue secretary Hasmukh Adhia.Back to latest news