INDIAN GOVERNMENT providing a window to black money holders, the Government on Monday proposed to levya total tax, penalty and surcharge of 50% on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85% await those who don't disclose but 
caught.
Nearly three weeks after P M 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 mandatorily depositing of 25% 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 Garib 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 as well as a surcharge called PMGK cess at the rate of 33% of tax ( 33%of30%).
Further, the declarant have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the 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.
The current provisions of the penalty on under- reporting of income tax at 50% of the tax,and charges are being made to them. Under - reporting/ misreporting income is normally difference between returned income and assessed income.The Taxation Laws ( 2nd amendment) Bill, 2016 proposes to amend section
115BBE of the income tax act to provide for a punitive tax, surcharge and panalty on unexplained credit,investment ,cash and other assets.Against current provision of 30% flat tax rate plus surcharge and cess,a steep 60% tax will be levied on such income together with no expense,deductions or set- off allowed.
Also, the assessing officer can levy an additional 10% panalty ,taking the total tax incidence to 85% .The current provision for panalty in cases of search and seizure are proposed to be amended to provide for a penalty of 30% of income if it is admitted,returns filed and taxes paid. In all other cases,60% will be the penalty.
Currently,the penalty is 10% of the income, if the income is admitted,returned and taxes are paid. Penalty is at 60% in all other cases.
Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50% tax, surcharge and penalty,a quarter of the declared income tax 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.
caught.
Nearly three weeks after P M 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 mandatorily depositing of 25% 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 Garib 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 as well as a surcharge called PMGK cess at the rate of 33% of tax ( 33%of30%).
Further, the declarant have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the 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.
The current provisions of the penalty on under- reporting of income tax at 50% of the tax,and charges are being made to them. Under - reporting/ misreporting income is normally difference between returned income and assessed income.The Taxation Laws ( 2nd amendment) Bill, 2016 proposes to amend section
115BBE of the income tax act to provide for a punitive tax, surcharge and panalty on unexplained credit,investment ,cash and other assets.Against current provision of 30% flat tax rate plus surcharge and cess,a steep 60% tax will be levied on such income together with no expense,deductions or set- off allowed.Also, the assessing officer can levy an additional 10% panalty ,taking the total tax incidence to 85% .The current provision for panalty in cases of search and seizure are proposed to be amended to provide for a penalty of 30% of income if it is admitted,returns filed and taxes paid. In all other cases,60% will be the penalty.
Currently,the penalty is 10% of the income, if the income is admitted,returned and taxes are paid. Penalty is at 60% in all other cases.
Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50% tax, surcharge and penalty,a quarter of the declared income tax 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.
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