Pay 50 per cent tax on unaccounted deposits, or 85 per cent if caught: Government

The amendment bill, introduced by Finance Minister Arun Jaitley, proposes 30 per cent tax on undisclosed income plus 10 per cent penalty beside a 33 per cent surcharge.

By: Express Web Desk | New Delhi | Updated: November 28, 2016 6:35 pm
Income Tax Amendment Bill, income tax, income tax bill, income tax amendment, lok sabha,parliament, The Bill also propose a 75 per cent tax and 10 per cent penalty in case Income Tax authorities detect undisclosed wealth deposited post demonetisation.

Providing a window to black money holders, the government on Monday proposed to levy a total tax, penalty and surcharge of 50 per cent on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85 per cent await those who don’t disclose but are caught. Nearly three weeks after Prime Minister Narendra Modi announced junking high denomination 500 and 1000 rupee notes, Finance Minister Arun Jaitley introduced a bill to amend the Income Tax law which also provides for black money declarants a mandatory deposit of 25 per cent 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 500 and 1000 rupee notes under the Pradhan Mantri Grabi Kalyan Yojana 2016, will have to pay a tax at the rate of 30 per cent of the undisclosed income.

Additionally, a 10 per cent penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33 per cent of tax (33 per cent of 30 per cent).

Further, the declarants have to deposit 25 per cent 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 per cent tax plus a surcharge of 25 per cent of tax (15 per cent), which will amount a levy of 75 per cent.

Besides, if the assessing officer decides he can charge a 10 per cent penalty in addition to the 75 per cent tax.

The current provisions of penalty on under-reporting of income at 50 per cent of the tax, and misreporting (200 per cent 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.

Against current provision of 30 per cent flat tax rate plus surcharge and cesss, a steep 60 per cent tax will be levied on such income together with 25 per cent surcharge of tax (15 per cent of such income). So total incidence of tax will be 75 per cent with no expense, deductions or set-off allowed. Also, the assessing officer can levy an additional 10 per cent penalty, taking the total tax incidence to 85 per cent.

The current provisions for penalty in cases of search and seizure are proposed to be amended to provide for a penalty of 30 per cent of income if it is admitted, returns filed and taxes paid. In all other cases, 60 per cent will be the penalty.

Currently, the penalty is 10 per cent of the income, if the income is admitted, returned and taxes are paid. Penalty is at 60 per cent in all other cases.

Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50 per cent 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 December 30. PMGKY will come in as a new Chapter 9 in Finance Act 2016,” he said.

Meanwhile, the opposition parties continued to protest against demonetisation in the lower house. Seeking to break the deadlock, Home Minister Rajnath Singht told Lok Sabha that Prime Minister Narendra Modi will speak on demonetisation if the Opposition wanted, but the rival parties demanding debate with a provision for voting remained unimpressed, forcing the House to adjourn for the second time.

(With inputs from PTI)

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First Published on: November 28, 2016 3:14 pm
  1. P
    Puzzled and
    Nov 28, 2016 at 2:27 pm
    This is a big scam, what happened to 30 % tax and 200 % penalty. This government has no planning .
    Reply
    1. P
      Puzzled and
      Nov 28, 2016 at 2:33 pm
      This is expected to take 1% off GDP growth on a base of 2 trillion dollars which is 20 billion dollars. Thus is equal to 1,40,000 crore rupees. This is not even counting cost to.nation and loss of 80 lives. Will this scheme atl east gain that much. I am sure there are competent economists in government. You don't burn your house to kill rats, you lay traps, you make sure there is no food lying around
      Reply
      1. J
        Jim
        Nov 28, 2016 at 11:30 pm
        Next Step will be by people of this country and that will be change Modi Government. Nothing works without planning and proper implementation and Modi has already left this to succeed on "Ram Bharosey".
        Reply
        1. S
          SURESH
          Nov 28, 2016 at 10:40 am
          Pyare upna naam likho uljhao nahi.THESE ARE NOT INDIA'S VIEWS.
          Reply
          1. S
            SURESH
            Nov 28, 2016 at 10:38 am
            you are right
            Reply
            1. M
              Michellegt;Vedicgt;human
              Nov 28, 2016 at 9:57 am
              All good
              Reply
              1. S
                SubbuI
                Nov 28, 2016 at 12:51 pm
                HOW MUCH ASARAM BAPPU HAVE TO PAY PENALTY TO MAKE HIS 5000 CRORE BLACK ( unACCOUNTED) WEALTH HE SLASHED IN GUJARATH WHEN THIS NALAYAK NMODI WASCHIEF MINISTER THERE. lt;br/gt;HOW MANY YEARS JAIL TERM THE BUTCHER OF GUJARATH MOST BE AWARDWE BY CJI THAKUR FOR ABBETTING ASARAM BAPPU FOR 12 yEARS WHEN HE RULED THE MODREN STATE?lt;br/gt;Hope BAKTHS ask his AKAAR MODI!
                Reply
                1. S
                  SubbuI
                  Nov 28, 2016 at 12:54 pm
                  TYPOS IN MY BELOW COMMENT:-lt;br/gt;MUST BE AWARDED not MOST BE AWARDWE
                  Reply
                  1. S
                    Shakri
                    Nov 29, 2016 at 12:00 pm
                    In my game play of business man. Small game lost or for shaheed 70 people thinking . Chor would be caught and we r dying like soldiers . Now dice is thrown . Chance says - chor give us 50% bheek and just go away. Hmmm...lt;br/gt;lt;br/gt;If stopping 1000 note stopped illicit printed Kashmir funds. Very happy for peace now , awesome. But in future after printing new 2k note . Double advantage would be there.
                    Reply
                    1. S
                      Shakri
                      Nov 29, 2016 at 12:04 pm
                      Janab had this intention prior. Then should had said on 8th that use 500 1k fod 1 month and then only below 2k notes would be valid . 70 log shaheed toh nahi hote
                      Reply
                      1. R
                        Rajesh Jain
                        Nov 28, 2016 at 12:36 pm
                        When govt wants complete ebanking. Then why not repeal all types of taxes and implement only BTT (banking transaction tax) as suggested by arthkranti. Why changes in existing tax laws which takes its own time. Is the govt is of the view that existing law is not competent?.lt;br/gt;Why people at large should be subjected to multiple taxation and simultaneous banking transaction charges. No saving by people but only slaving to PSU's as they are facing financial crunch and govt declared to fund them earlier and now all Public Sector Banks funded with public money by deposit without free withdrawal of their hard earned savings/deposits.....
                        Reply
                        1. A
                          ams
                          Nov 28, 2016 at 11:43 pm
                          Modijeeeeeeeeeeeeeeeeee GENIUS!!!!! Sit you ar now allowing horders to keep 50% bilack money!! AWESOME!!!!!!
                          Reply
                          1. V
                            Virendra Sason
                            Nov 28, 2016 at 11:21 am
                            RS 500 व RS1000 के 16 लाख करोड़ धन का मंथन के परिणाम स्वरुप काला-धन जनधन योजना वाले खा गए। हालां कि मंथन पर RS15,000 करोड़ व्यय होने की सम्भावना है। इतना बवाल मचा दिया की दुनिया तमाशा देख रही है। अब कौन सा ब्रह्म अस्त्र चलाने की तयारी हो रही है। lt;br/gt;सुझाव : रियल स्टेट, माइनिंग, सैंड माफिया को देखो। lt;br/gt;बड़ा सुझाव :1. इम्पोर्ट के इनफ्लैटेड बिल की 100% चेकिंग। lt;br/gt;2. एक्सपोर्ट के इनफ्लैटेड बिल की चेकिंग करे। lt;br/gt;इन तीनों पर सख्ती से 2017-2018 में कम से कम 2 से 3 लाख करोड़ मिल सकते है और वोट बैंक INTACT रहेगा।
                            Reply
                            1. A
                              Alok Sharma
                              Nov 28, 2016 at 4:45 pm
                              So we are back into Socialist controlled economic regime of mid 70s....
                              Reply
                              1. A
                                Amit Roy
                                Nov 28, 2016 at 11:51 am
                                Please let the bank employees work as spy for the govt. This way people will be trapped and govts income will be much more. They deserve the penalty.
                                Reply
                                1. D
                                  Diplomat
                                  Nov 29, 2016 at 4:50 am
                                  So, all that 200% penalty news and infographics were a sham?
                                  Reply
                                  1. S
                                    Saffiuddin Sheikh
                                    Nov 28, 2016 at 2:12 pm
                                    If u are really honest then declare that with in a year you will appoint 1 judge for every 1 lakh people, now ratio is 1:50 and CJ of Supreme court is crying in public, you talk about bringing black money, smart city. You may be smart but prove that you are with honesty.
                                    Reply
                                    1. S
                                      Saffiuddin Sheikh
                                      Nov 28, 2016 at 2:04 pm
                                      law of unaccounted money, means for any money what you have with you, must have a proof of income else that will be treated as black money and penalty will be put. This is like to force each and every shopkeeper to do business and keep record of everything. Irrespective of how much you sell. Very clean and clear idea to read and debate. But only shopkeeper will be knowing how much pain he has to bear now. Freedom is gone.lt;br/gt;lt;br/gt;My only request to Modiji when you will force political party to keep record of their incoming funds. All corruptions are linked to political parties. If you are really honest. Dare to do it. Plz.
                                      Reply
                                      1. A
                                        Arvind
                                        Nov 29, 2016 at 12:50 am
                                        As govt. cannot catch even 1000 most corrupt people in India, such lunatic actions are necessary from election point-of-view. What is the use of all the fat govt. agencies? They are just experts in catching innocent people to show that they are working. What a shame!
                                        Reply
                                        1. A
                                          Arvind
                                          Nov 29, 2016 at 12:57 am
                                          But why election funding is not transparent? Why not even 1 BJP politician is behind bars? Why not even single businessman linked to BJP is in jail? How BJP spent thousands of crores rupees in last LS election? Corruption will not end unless there is honest intention and efforts. Only political gimmickry for votes, will just protect the status quo after a little noise and rhetoric.
                                          Reply
                                          1. A
                                            Anony
                                            Nov 28, 2016 at 10:40 am
                                            Hahahaha. Another scheme for the corrupt to turn their Black Money to White.lt;br/gt;lt;br/gt;Indians have been fooled again as usual
                                            Reply
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