Black money disclosure scheme a flop; tax evaders seek more time to deposit money

Mumbai: RBI displays the newly issued rupees 500 and 2000 notes at Reserve Bank of India headquarters in Mumbai on Wednesday. PTI Photo by Santosh Hirlekar (PTI11_9_2016_000203B)

In a major setback for the government’s revenue targets, the Pradhan Mantri Garib Kalyan Yojana (PMGKY) for tax evaders to declare unaccounted money has turned out to be a big flop.

Barely Rs 4,000 crore of undisclosed income has been reported under the scheme, against the targeted Rs 1 lakh crore, two senior officials told Moneycontrol.

Collection under the scheme from the country's business capital, Mumbai, was a  meagre Rs 500 crore.

Tax officials say declarants are seeking more time to deposit the money they declared under the scheme.

The I-T Department has got requests to extend the deadline for depositing money to September 30, which is also the last day to submit money under IDS (Income Declaration Scheme).

Also read: Why black money holders don't mind taking on I-T department

Unveiled a month after the demonetisation, the PMGKY was aimed to give another chance to individuals to disclose unaccounted money. Black money holders will be levied a charge of 50 percent on the declared amount. Another 25 percent of the amount declared will go into the non interest-bearing Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, for four years.

Black money holders who choose not to reveal their unaccounted income under PMGKY will have to pay 107 percent tax if caught.

The government has said that it would closely track black money holders, in particular those who have failed to disclose unaccounted income.

Finance Minister Arun Jaitley said in the Lok Sabha on Wednesday that through data mining, the Central Board of Direct Taxes (CBDT) and the Income Tax department found that cash deposited by 18 lakh people did not match their income profile.

After the government asked for an explanation from these individuals through SMS and emails, only 8.71 lakh citizens responded. The Income Tax department will take action against the remaining people in the coming days, Jaitley said.