Finance Minister Mr. Arun
Jaitley introduced an amendment bill for Income Tax law On 28 November 2016.
According to this amended
bill, who declared his undisclosed income or Black Money since the ban on Rs.
500 and Rs. 1 000 has announced will have to pay 30% tax of the undisclosed
income.
Along with 30% tax 10%
penalty will also be imposed on Undisclosed Income and Surcharge (PMGK Cess) of
33% of tax amount (33% of 30% of Undisclosed Income).
Moreover, declarants have
to deposit 25% of undisclosed Income after demonetisation in the Pradhan Mantri
Garib Kalyan Yojna.
·
Income tax at 30% of
the undisclosed income,
·
Penalty at 10% of the
undisclosed income.
·
Further, a surcharge
to be called Pradhan Mantri Garib Kalyan Cess at 33% of tax is also proposed to
be levied.
·
Totalling to about 50%
·
·
In addition to tax,
surcharge and penalty (totalling to about 50%), the declarant shall have to
deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI
under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. No
interest will be paid to the owner for this. After four years the owner can
reclaim his money (25%).
·
Income Tax at 30% of
the undisclosed income, Tax will be Rs. 1.5 lakh
·
Penalty at 10% of the
undisclosed income, penalty will be Rs. 50,000.
·
Surcharge at 33% of income
tax that is 33% of Rs. 1.5 lakh will be Rs. 49,500,
·
Total
income tax & penalty payable: Rs. 2,49,500
·
And above that 25% of
undisclosed income in a Deposit Scheme that is Rs. 1.25 lakh will be
locked in for 4 (four) years without accruing any interest.
What
is Penalty for those who continue to hold Undisclosed Income ?
The people who continue to hold
undisclosed cash and if they caught
·
Flat 60% tax plus Surcharge of 25%
of tax amount, as per the amended Income Tax law. Tax Under Section 115BBE
·
·
Besides above charges, if assessing
officer feels then he can impose additional 10% penalty to the 75%
tax. For PENALTY under Section 271AAC
·
·
Penalty for search/seizure cases :
Penalty (271AAB)
·
Penalty for under-reporting on
income is flat 50% tax and 200% tax on misreporting. And are no changes to
them.
·
How
does tax on Undisclosed income compare to if one does not declare the Income
and is caught?
For
Tax Under Section 115BBE: Flat rate of
tax at 60% + surcharge at 25% of tax (that is 15% of such income) + cess at 3%
of tax & surcharge. So total incidence of tax is 77.25% approx. (No
expense, deductions, set-off is allowed)
For Example: If Rs. 5 lakh is the
unexplained credit, investment, cash and other assets, 60% tax is Rs. 3 lakh
·
Surcharge at 25% of tax (that
is 15% of such income) that is Rs. 75,000
·
Plus cess at 3% of income tax & surcharge Rs. 11,250
·
Which is equal to Rs. 3,86,250 lakh that is 77.25% of unexplained credit,
investment, cash and other assets
·
For
PENALTY (Section 271AAC)
If Assessing Officer determines income referred to in section 115BBE, penalty at 10% of tax payable in addition to tax (including surcharge) of 77.25%.
Example of undisclosed income of Rs. 5 lakh : In addition to Rs. 3.86.250 lakh,
Rs. 30,000 is to be paid.
Total
tax plus penalty: Rs. 4,16,250. This comes to 83.25% of the total unaccounted income disclosed
Penalty
for search/seizure cases : Penalty (271AAB)
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Example: Say, income undisclosed and
thus seized or searched is Rs. 5 lakh.
(i) 30% of income, if admitted,
returned and taxes are paid 30% of Rs. 5 lakh that is Rs. 1.5 lakh
(ii) 60% of income in any other
case 60% of Rs. 5 lakh that is Rs.
3 lakh
Where
will the money for Pradhan Mantri Garib Kalyan Yojna be used
This locked into the Pradhan Mantri
Garib Kalyan Yojna will be used for the Government projects of irrigation,
housing, toilets, infrastructure, primary education, primary health and
livelihood in order to spread justice and equality.
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