Nearly three weeks after PM 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 mandatory depositing of 25 per cent of the amount disclosed in anti-poverty schemes 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 per cent of the undisclosed income.
Additionally, a 10 per cent penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33 per cent of tax (33 per cent of 30 per cent).
Further, the declarants have to deposit 25 per cent 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 per cent tax plus a surcharge of 25 per cent of tax (15 per cent), which will amount a levy of 75 per cent.
Besides, if the assessing officer decides he can charge a 10 per cent penalty in addition to the 75 per cent tax. The current provisions of penalty on under-reporting of income at 50 per cent of the tax, and misreporting (200 per cent of tax) will remain and no changes are being made to them.