Proposed scheme of taxation on Black Money

Government has proposed a new income disclosure scheme under the name of Pradhan Mantri Garib Kalyan Yojna [PMGKY] 2016 to pluggin certain loopholes under the Income Tax Act. The scheme  proposes to amend sections 115BBE, 271AAC and 271AAB thereby hiking penalties on unaccounted cash credits and undisclosed income.

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Declaration Under PMGKY

An assessee who declares unaccounted income under PMGKY 2016, will have to bear total levy of 49.90 % on such income :

1. Tax @ 30% on disclosed income

2. Surcharge @ 33% on tax paid [ie. 9.9% on disclosed income]

3. Penalty @ 10% on disclosed income

Further, 25% of the disclosed income will have to be compulsorily placed in  interest free deposit scheme for 4 years.

This amount is proposed to be utilised for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood and other social causes to maintain justice and equality.

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Taxation under Section 115BBE

In order to strengthen the demontisation scheme, following amendments have been proposed in section 115BBE:

1. Unexplained cash/investments/assets etc. declared in return by the tax payer

Tax @ 60 % plus 25% surcharge on tax payable [total levy of 75% ]

2. Unexplained cash/investments/assets etc. not declared in return by the tax payer but detected by Tax Authority 

In such case, addition penalty @10% will be levied under section 271AAC [ie. total levy will be 85%] .

3. Penalty in case of Search and Seizure cases

Any person holding black money which is found during a search shall be taxed @ 60% plus 25% surcharge on tax payable plus penalty @ 30% on income under section 271AAB, if the income is admitted, returned and the taxes are paid or 60% in any other case [ie. total levy will be 105% or 135% as the case may be].

**Cess @ 3% on amount of tax and surcharge shall be borne by the assessee. 

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