The Government clarified the taxation on black money and stated that as a penalty 50 percent tax will be charged if the individual surrenders the unaccounted money or 85 percent would be charged in case the person gets caught red handed with the unaccounted money.
Additionally, a penalty of 10 per cent penalty along with PMGK Cess at the rate of 33 per cent of tax will be levied on the undisclosed amount. Also, the declarants need to deposit 25 per cent of the undisclosed income in government scheme under the surveillance of the Reserve Bank of India (RBI).
The money deposited for the scheme will be used by the government for various public projects such as infrastructure, primary education,livelihood, sanitation, housing, rural development, as stated in the Objects and Reasons of the Bill.
The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115 BBE of the Income Tax Act to provide for a penal tax, surcharge and fine on unexplained credit, investment, cash and other assets.
50 per cent tax, surcharge and penalty, a fourth of the declared income will be deposited in interest-free deposit scheme under the new Pradhan Mantri Garib Kalyan Yojana for four years.
Meanwhile, Revenue Secretary Hasmukh Adhia said the deterrent provisions were essential so that people have the fear of accumulating black money.
“The disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund. It would ensure immunity from wealth tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics, and black money act,” he said.
Deposits which have been already made from November 10 will be covered under PMGKY. “Last date we will notify after the bill is passed but it is likely to be December 30. PMGKY will come in as a new Chapter 9 in Finance Act 2016,” he said.