The government has managed to garner only Rs 2,300 crore through its second tax compliance window, Pradhan Mantri Garib Kalyan Yojana (PMGKY), provided for people to come clean with their unaccounted cash and deposits after demonetisation. The amount garnered in the over three-month long PMGKY scheme has been dismal compared with the tax department’s informal target of Rs 1 lakh crore. The tax department, however, had not announced any official target for the PMGKY scheme, popularly known as IDS-II or the second version of the Income Declaration Scheme (IDS). Under the Income Declaration Scheme, which was the government’s first tax compliance window from June 1-September 30 last year, Rs 12,700 crore has been collected through two instalments of tax and penalties in 2016-17, officials said.
Declarants under the IDS were supposed to pay the first installment of 25 per cent by November 2016 followed by another of 25 per cent by March 31, 2017. The remaining 50 per cent amount will have to be paid to the exchequer by September 30, 2017. The IDS, which was announced in Budget for 2016-17, had a tax rate of 30 per cent plus a Krishi Kalyan Cess of 25 per cent on the tax and a penalty at the rate of 25 per cent of the tax, thereby taking the total tax to 45 per cent of the income declared under the scheme.
Following demonetisation of high-denomination currency notes of Rs 500 and Rs 1,000, the government in December offered a second chance for those depositing any unaccounted funds through the PMGKY scheme, which was open from December 17-March 31, 2017. Under the PMGKY scheme, a 30 per cent tax plus 33 per cent surcharge on the tax and a 10 per cent penalty was proposed to be levied on the undisclosed income in the form of cash and deposits. Along with the tax, penalty and surcharge, the declarant had to deposit 25 per cent of the undisclosed income in an interest-free deposit scheme for four years.
If the undisclosed cash or deposits were not declared under the PMGKY scheme, it will attract tax, surcharge and cess totalling 77.25 per cent of the income if it is declared in the income tax returns. In case the disclosure is not made either under the scheme or in the income tax returns, then it will attract additional penalty of 10 per cent. For those who do not declare under the PMGKY and are raided, they will face 107.25 per cent tax and penalty, if they surrender their undisclosed income during the search. Those who do not surrender such hidden income even during searches will stand to face the highest level of penalty and tax at 137.25 per cent.
With the collections from these two tax compliance windows, the government met its direct tax collections to a dot for 2016-17. As per the CBDT data released on Tuesday, net direct tax collections for the previous financial year stood at Rs 8.47 lakh crore, the same as the revised estimates for 2016-17. However, the government’s provisional tax collections, including both direct and indirect taxes, grew 18 per cent to Rs 17.10 lakh crore, higher than the government’s revised estimate of Rs 16.97 lakh crore, driven by higher-than-estimated indirect tax collections.