Intensifying its black money hunt, the government tabled a Bill to amend the Income Tax Act in the Lok Sabha on Monday to impose more tax, penalty and surcharge on deposits made after the demonetisation drive was launched nearly three weeks ago.
The amendments provide a window to black money holders by proposing 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.
The key points of the New Taxation Amendment Bill, tabled by Finance Minister Arun Jaitley, are:
1) The old notes must be deposited in banks by the end of the year. Deposits over 2.5 lakhs will be studied by tax officials.
2) Those who acknowledge they have placed black or previously untaxed money in their accounts will pay a 60 percent penalty in addition to taxes.
3) A disclosure scheme called the PMGKY 2016 allows people to deposit money till April by paying 50 per cent of the total amount — 30 per cent as tax, 10 per cent as penalty and 33 per cent of the taxed amount– that is 10 per cent — as Garib Kalyan Cess.
4) So the taxes and levies will equal nearly 50 per cent of the deposit.
5) 25 per cent of the money that remains after taxes will be available to the account holder.
6) The other 25 per cent or rest of the black money that’s being converted will be used by the government for four years in a special new fund that will be called the Pradhan Mantri Garib Kalyan Yojana and will be used by to fund welfare schemes. No interest will be paid to the owner for this.
7) For money that is found in raids, taxes and penalties will take nearly 85 per cent of the amount, leaving 15 per cent with the owner. (For cash whose source can be identified, the penalty will be 30 per cent along with the regular tax rate; for money whose origin cannot be explained, the penalty will double to 60 per cent).
8) The new proposal was brought to parliament today by Finance Minister Arun Jaitley.