WITH a huge amount of money flowing into the banking system after demonetisation, the government has tightened its grip on tax evaders. It has now given people with black money a last chance to come clean by availing the Pradhan Mantri Garib Kalyan Yojana (PMGKY). Let us get some clarity on the provisions of the tax laws post the Taxation Laws (Second Amendment) Bill, 2016 that shall be applicable to various categories of tax evaders:
For some peace of mind
Under PMGKY, black money hoarders can declare black money by paying tax @ 30%, penalty @10% and a surcharge @ 33%, totaling to an outgo of 50% of the concealed income with an additional tab on 25% of their money for four years.
Those willing to take a chance by filing their return and waiting to see if the tax authorities scrutinise their case, would come under the revised provisions of tax and penalty if the taxman alleges the income is from unexplained sources. Those found to be holding unexplained cash, credit, investments and assets shall be liable to pay tax @ 60%, surcharge @ 25% of tax totaling to 75% of the undisclosed income. In addition, penalty @ 10% of such tax shall be imposed, totaling an outgo of 82%.
Bravehearts bet on their luck
There are those who would prefer not to declare black money, and will wait to see if their names are selected for search by the tax authorities. However, if such income comes to be found by the taxman, and the tax evader admits his default, the tax and surcharge would remain 75% but penalty would be 30% of undisclosed income, leading to total outgo of 105%, i.e., losing all the concealed income and additionally paying 5% out of the white money, if any.
However, the worst case is when the tax evader fails to admit his default. While tax and surcharge would remain at 75%, the penalty stands increased to 60% of the undisclosed income, resulting in total liability of 135%, i.e., in addition to the black money, the tax evader would have to pay an additional 35% on such undisclosed income to buy peace.
Questions that may arise
What about the money deposited till now? Money deposited since November 10 can be declared under the PMGKY.
How should one file declaration under PMGKY? Regulations governing the process of filing declaration and last date for it shall be notified shortly.
Would there be immunity from proceedings? The taxpayer would be granted immunity from wealth tax, civil laws and other taxation laws, but there is no immunity from FEMA, PMLA, Narcotics, and Black Money Act.
The writer is executive director, Nangia & Co.