Continuing with the crackdown on black money, the Narendra Modi government is looking to introduce a new tax structure for undisclosed income. The government is proposing to levy a total tax, penalty and surcharge of 50% on the amount deposited post demonetisation. A higher taxe and stiffer penalty of up to 85% will be levied on those who don’t disclose, but are caught. The new tax scheme will be called Pradhan Mantri Garib Kalyan Yojana for income disclosure.
FM Arun Jaitley introduced a bill to amend the Income Tax law. 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% of the undisclosed income. Additionally, a 10% penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33% of tax (33% of 30%).
Further, the declarants have to deposit 25% 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% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%. Besides, if the assessing officer decides he can charge a 10% penalty in addition to the 75% tax.
Meanwhile, the government has warned that those who are using other people’s bank accounts to convert their black money will be severely punished. Not only that, those who allow their accounts to be misused for this purpose will also face prosecution. The Finance Ministry’s warnings come in wake of reports that people are misusing JanDhan accounts to deposit their black money, paying a premium to the poor person who is allowing his/her bank account to be used. The Finance Ministry said has said, “Tax evasion activities by some people using other persons’ Bank A/Cs to convert their black money can be subjected to income tax & penalty. Also the person who allows his or her bank account to be misused for this purpose can be prosecuted for abetment under Income Tax Act.”
“However, the genuine persons having their own household savings in cash and depositing the same in the bank would not be questioned. People are requested NOT to come in the lure of black money converters & be a partner in this crime of converting black money into white,” the Finance Ministry said. Banks have reported that over Rs 21,000 crore being deposited in zero-balance Jan Dhan accounts in two weeks after the 500 and 1,000 rupee notes were banned, which authorities apprehend may be the laundered blackmoney.
(With inputs from PTI)