New Delhi, November 28: Union Finance Minister Arun Jaitley has moved a money bill to amend Income Tax Act in Lok Sabha on ninth day of Winter session of Parliament.
The Bill is conceived as government’s hasty move to cap unaccounted cash being deposited post demonitisation of Rs 500 and Rs 1000 currency notes on November 8.
Under the new amendment to IT Act, govt purports to bring 30 per cent tax on undisclosed income along with 10 per cent penalty and 33 per cent surcharge.
Besides it also proposes a 75 per cent tax and 10 per cent penalty for those who are guilty of accumulating wealth deposition post note ban.
The bill also makes it mandatory to deposit 25 per cent of undisclosed income to the Pradhan Mantri Garib Kalyan Deposit Scheme.
Besides, if the assessing officer decides, he can charge a 10 per cent penalty in addition to the 75 per cent tax.
The current provisions of penalty on under-reporting of income at 50 per cent of the tax, and misreporting (200 per cent of tax) will remain and no changes are being made to them.
Under-reporting/misreporting income is normally difference between returned income and assessed income.
The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115BBE of the Income Tax Act to provide for a punitive tax, surcharge and penalty on unexplained credit, investment, cash and other assets.
Against current provision of 30 per cent flat tax rate plus surcharge and cesss, a steep 60 per cent tax will be levied on such income together with 25 per cent surcharge of tax (15 per cent of such income). So total incidence of tax will be 75 per cent with no expense, deductions or set-off allowed.
Also, the assessing officer can levy an additional 10 per cent penalty, taking the total tax incidence to 85 per cent.
The current provisions for penalty in cases of search and seizure are proposed to be amended to provide for a penalty of 30 per cent of income if it is admitted, returns filed and taxes paid. In all other cases, 60 per cent will be the penalty.
Currently, the penalty is 10 per cent of the income, if the income is admitted, returned and taxes are paid. Penalty is at 60 per cent in all other cases.
Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50 per cent tax, surcharge and penalty, a quarter of the declared income will be to be deposited in interest free deposit scheme for four years.
Revenue Secretary Hasmukh Adhia said the deterrent provisions were necessary so that people have the fear of hoarding 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
The government officials have ruled out any blanket cap for those submitting deposits under Rs 2.5 lakhs. Earlier Finance Ministry has said that all transactions are being monitored. He also hinted at misuse of Jan Dhan Accounts for depositing unaccounted money by few as record deposits in Jandhan accounts were reported with in 9 days of high denomination currency note ban. The new bill is primarliy proposed to meet the indiscrepancies in money deposition and accounts.
However amid absence of Prime Minister Narendra Modi in the parliament, opposition parties have registered a united protest against demonetisation. More than 50 people have died in the country. Long queues at ATMs cease to exist as government has limited withdrawal limit and unprecedented cash crunch has derailed Indian economy.
The fate of the moeny bill will also depend on the proceeding of house.
Wefornews Bureau (With PTI inputs)