The Union Finance Minister Arun Jaitley yesterday introduced the Taxation Laws (Second Amendment) Bill, 2016 with a view to tax unaccounted black money deposited in bank accounts pursuant to demonetisation. The government has introduced Chapter IXA: ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016′ (PMGKY) consisting of
The Union Finance Minister Arun Jaitley yesterday introduced the Taxation Laws (Second Amendment) Bill, 2016 with a view to tax unaccounted black money deposited in bank accounts pursuant to demonetisation. The government has introduced Chapter IXA: ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016′ (PMGKY) consisting of Section 199A to 199R .The salient terms of the proposal to tax the unaccounted cash are as follows:
(i) 30 per cent tax on undisclosed income plus 10 per cent penalty as also a 33 per cent surcharge ( Total Tax incidence of around 49.9% of the amount declared );
(ii) 25 per cent of undisclosed income post demonetisation has to be deposited in the Pradhan Mantri Garib Kalyan Deposit Scheme for a lock in period of 4 years (non-interest bearing) ;
The money from the Pradhan Mantri Garib Kalyan Deposit scheme would be used for projects in irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood so that there is justice and equality, states the Statement of Objects and Reasons of the Bill
(iii) In other cases, wherein this opportunity is not availed, undisclosed wealth deposited post demonetisation which is detected by the income-tax authorities will attract 75 per cent tax and 10 per cent penalty.
The copy of the Taxation Laws (Second Amendment ) Bill, 2016 along with a tax rate/penalty analysis sheet is enclosed herewith. Tax and penalty on cash deposit will be calculated accordingly.
Download PDF for the chart
PARTICULARS
EXISTING PROVISIONS
PROPOSED PROVISIONS
General provision for penalty
PENALTY (Section 270A)
No changes proposed
Under-reporting – @50% of tax
Misreporting – @200% of tax
(Under-reporting/ Misreporting income
is normally difference between returned
income and assessed income)
Provisions for taxation & penalty
TAX (Section 115BBE)
TAX (Section 115BBE)
of unexplained credit, investment,
Flat rate of tax @60% + surcharge @25% of tax (i.e.
cash and other assets
Flat rate of tax @30% + surcharge +
15% of such income). So total incidence of tax is 75%
cess
approx.
(No expense, deductions, set-off is
(No expense, deductions, set-off is allowed)
allowed)
PENALTY (Section 271AAC)
If Assessing Officer determines income referred to in
section 115BBE, penalty @10% of tax payable in addition
to tax (including surcharge) of 75%.
Penalty for search seizure cases
Penalty (271AAB)
Penalty (271AAB)
(i) 10% of income, if admitted, returned
(i) 30% of income, if admitted, returned and taxes are
and taxes are paid
paid
(ii) 20% of income, if not admitted but
(ii) 60% of income in any other case
returned and taxes are paid
(iii) 60% of income in any other case
Taxation and Investment Regime
New Taxation and Investment Regime
Undisclosed income in the form of cash & bank deposit
for Pradhan Mantri Garib Kalyan
can be declared:
Yojana, 2016’ (PMGKY)
(A) Tax, Surcharge, Penalty payable
Tax @30% of income declared
Surcharge @33% of tax
Penalty @10% of income declared
Total @50% of income (approx.)
(B) Deposit
25% of declared income to be deposited in interest free
Deposit Scheme for four years.
