The Centre has proposed that people with undisclosed income can come clean by paying 30% tax on the amount along with 10% penalty and 33% surcharge. Union Finance Minister Arun Jaitley introduced the government’s suggested amendments in the Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha on Monday, reported The Hindu.
Such declarants will also have to deposit 25% of the amount in an interest-free deposit scheme for four years. The government has not yet announced the deposit scheme that will be used to keep a portion of such undisclosed sums under a lock-in period. The money will be used for government programmes for irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc.
The Centre has also proposed a 75% tax and 10% penalty in case the money is not voluntarily disclosed after demonetisation, but detected by Income Tax officials. The government has kept intact the current provision of 50% penalty on under-reporting of income (returned income), and 200% for misreporting (assessed income).
As of now, undisclosed income is taxed at a flat rate of 30%, besides surcharge and cess. The government intends to amend Section 115BBE of the I-T Act to introduce punitive tax, surcharge and penalty on unexplained credit, investment, cash and other assets.
Prime Minister Narendra Modi had announced his government’s decision to demonetise Rs 500 and Rs 1,000 notes on November 8, in what he said was a step to fight black money, corruption and circulation of counterfeit currency in the country.