Income Tax Amendment Bill tabled in Lok Sabha; pay 50% Tax on unaccounted deposits or 85% if caught

November,28,2016:

On Monday, the Government has proposed to levy a total tax, penalty and surcharge of 50 per cent on the amount deposited post the demonetisation while the higher taxes and stiffer penalty of up to 85 per cent await those who don’t disclose but are caught.Finance Minister Arun Jaitley introduced the bill to amend the Income Tax Law which also provides for the black money declarants a mandatory deposit of 25 per cent of the amount disclosed in the anti-poverty scheme without any 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 would be levied on undisclosed income and surcharge called PMGK Cess at the rate of 33 per cent of tax (33 per cent of 30 per cent).

The declarants will have to deposit 25 per cent of the undisclosed income in a scheme to be notified by government in consultation with the Reserve Bank of India (RBI).

The money from scheme would be used for projects in the irrigation, housing, toilets, infrastructure, primary education etc. This would lead to justice and equality, stated the Statement of Objects and Reasons of the Bill.

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 for those who continue to hold onto the undisclosed cash and are caught subsequently .

The assessing officer can decide to charge a 10 per cent penalty in addition to the 75 per cent tax.