The Narendra Modi government is planning to amend the Income Tax Act so that the Centre can take penal action against those who deposited unaccounted for cash comprising demonetised currency notes after Rs 500 and Rs 1,000 notes were scrapped on November 8, PTI reported. The government is likely to propose the amendment to the Act next week in Parliament.

If the proposal is passed, the guilty will have to pay a minimum 50% tax and half of the remaining amount will be put under lock-in for four years, which means the money cannot be withdrawn during that period. However, those who do not reveal their unaccounted for cash voluntarily, but are detected by tax officials, will attract a higher tax and penalty of around 90%.

The amendments were discussed during a Union Cabinet meeting chaired by the prime minister. An unidentified official told The Indian Express that the government would introduce the changes to the Act during the ongoing Winter Session of Parliament. Modi had said that cash deposits above Rs 2.5 lakh would be under IT lens. Tax authorities had earlier said that those who make deposits of unaccounted for cash of more than Rs 2.5 lakh would attract 200% tax evasion fine, but several experts had questioned the claim. The one-time compliance window under the Income Declaration Scheme ended on September 30.