The government has introduced the new income declaration scheme in the Lok Sabha, to give the black money hoarders a further opportunity to disclose their undisclosed income and avoid penalty and prosecution. This might be the last opportunity and a lot of people may want to take it.
The previously issued 1,000 and 500 denominated currencies have to be deposited in banks by the end of the year 2016. Any deposit beyond 2.5 lakhs will be inspected by tax officials.
Those who recognize they have placed black money or have earlier untaxed money in their accounts then they have to pay 50 percent. A new disclosure scheme named as the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 permits people to deposit their undisclosed income till April by paying 50 percent.
|Add: Surcharge (Pradhan Mantri Garib Kalyan Cess)
33% of the tax rate above (i.e. 9.9%)
Subsequent to the payment of such tax specified above, the person is required to deposit 25% of the undisclosed income in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 for a period of four years as a lock-in period.
This amount of 25 percent will be utilized by the government for a period of four years in a special fund. Such special fund will be called as the Pradhan Mantri Garib Kalyan Yojana and will be utilized for welfare schemes. The holder of such untaxed or black money won’t be paid any interest on such sum deposited in the PMGKY fund.
If the person refuses the option provided by the government mentioned above, then 85 percent of the amount, i.e. undisclosed income amount, when detected will be liable to be taxed along with penalties.
Furthermore, any undisclosed money that is found in raids by the department then 90 percent of such sum will be taken as taxes and penalties.
The tax together with surcharge and penalty is required to be paid before filing the declaration under the scheme to the credit of the central government.
The procedure of filing the declaration under the new scheme has not yet been announced by the government and therefore, we have to wait till the scheme is finalized by the government.
No amount will be refunded under the scheme as tax, penalty or surcharge.
Where a person has paid such tax, surcharge and penalty under the scheme to the credit of the government then the prosecution shall be abated. This is to provide immunity against prosecution.