Official data for PMGKY: Unaccounted funds at just Rs 5000 crore

The Indian Express had reported in April that the government had managed to garner only Rs 2,300 crore as tax, penalty and surcharges through its second tax compliance window, PMGKY, provided for people to come clean with their unaccounted cash and deposits after demonetisation

By: ENS Economic Bureau | New Delhi | Published:June 2, 2017 3:45 am

Making an official announcement of the declarations under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) for the first time since the scheme ended in March, the government said the response to the tax compliance scheme “has not been so good”, with only Rs 5,000 crore unaccounted income being declared under the scheme.

“The response (to the PMGKY) has not been so good … it is about Rs 5,000 crore of income which was declared in PMGKY. There are mainly two factors for it. One, even before the scheme was announced, people had tried to put their cash into different accounts and they tried to adjust their money. Second, was the rate which we had fixed, 50 per cent plus 25 per cent … so, people saw that 75 per cent of the money was blocked,” Revenue Secretary Hasmukh Adhia told reporters.

Finance minister Arun Jaitley said the response to the PMGKY should not be seen in isolation as it was preceded by similar schemes during the year.

“Keep in mind that PMGKY in that financial year was not an isolated scheme. You first had the IDS (Income Declaration Scheme), then you had people depositing cash in banking system knowing they would incur a tax liability and PMGKY was over and above that. When you look at the total amount of disclosures made, you have to look at all three of them collectively,” the minister said, adding the government is continuing the drive against black money under the benami law.

The Indian Express had reported in April that the government had managed to garner only Rs 2,300 crore as tax, penalty and surcharges through its second tax compliance window, PMGKY, provided for people to come clean with their unaccounted cash and deposits after demonetisation of high-denomination currency notes of Rs 500 and Rs 1,000. Under the PMGKY scheme, which was open from December 17-March 31, 2017, a 30 per cent tax plus 33 per cent surcharge on the tax and a 10 per cent penalty totalling 49.9 per cent 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.

Under Income Declaration Scheme, which was the government’s first tax compliance window from June 1 to September 30 last year, the response was better with Rs 12,700 crore collected through two installments of tax and penalties in 2016-17 and an equal amount expected to flow into government coffers this year. 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.

With the collections from these two tax compliance windows, the government had met its direct tax collections to a dot for 2016-17. As per the CBDT data, 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.

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