Moneycontrol Bureau
The government on Monday offered a new window for tax dodgers to come clean, allowing them to declare hidden wealth by paying a 30 percent tax, a 10 penalty and a 33 percent surcharge under a proposed new law.
“The Taxation Laws (Second Amendment) Bill, 2016, proposes to make some changes in the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision,” finance minister Arun Jaitley said in the Bill that he moved for passage in Parliament.
In addition to tax surcharge and penalty, the declarant shall have to deposit 25 percent of undisclosed income in a welfare programme—the 'Pradhan Mantri Garib Kalyan Deposit Scheme, 2016'.
This amount will be locked a four-year lock-in period.
“The deposit shall bear no interest and the amount deposited shall be allowed to be withdrawn after four years from the date of deposit and shall also fulfil such other conditions as may be specified in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016,” the Bill specified.
Jaitley said this amount will be utilised for “irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc.; so that there is justice and equality”.
A 75 percent tax and 10 percent penalty in case Income Tax authorities detect undisclosed wealth deposited post demonetisation of Rs 500 and Rs 1000 notes.
The government moved the proposed law on a day when the opposition parties called for a nation-wide protest against the demonetisation of Rs 500 and Rs 1000 notes.
On November 8, the Prime Minister Narendra Modi banned the old Rs 500 and Rs 1000 notes as legal tender, setting in motion the world’s biggest currency recall exercise.
The Bill, once voted into law, will allow the setting up of a ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016' (PMGKY).
The latest scheme comes barely two months after a similar window allowed tax evaders an opportunity declare their hidden assets.
More than 64,000 people declared hidden assets worth Rs 65,250 crore availing the `Income Disclosure Scheme (IDS),’ a four month-long window that closed on September 30, allowing defaulters to come clean or face prosecution.
At 45 percent, the government will earned about Rs 30,000 crore from income taxes from the IDS—more than two-thirds the annual budget of Rs 38,500 crore set aside for the rural job guarantee scheme NREGA budget.
No estimates were immediately available on the extra revenues that the government expects to earn from the new scheme launched proposed on Monday.
“Evasion of taxes deprives the nation of critical resources which could enable the government to undertake anti-poverty and development programmes,” Jaitley said.
“It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage,” he said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
