New Delhi: The taxation laws (second amendment) bill was passed by the Lok Sabha on Tuesday without debate amid sloganeering by opposition parties, which demanded the government first discuss fallout of the scrapping of high-value notes.
While moving the bill, Union finance minister Arun Jaitley said the new legislation attempts to plug loopholes in existing laws to ensure tax evaders cannot legalize their black money.
“The aim is to ensure this money comes into the mainstream. The rich’s black money will be used for welfare of the poor,” Jaitley said.
The bill, which was tabled as a money bill in the Lok Sabha on Monday, allows taxpayers to declare their undisclosed income but with stringent penalties and at higher tax rates than in the last income disclosure scheme. Part of the proceeds from the scheme will be used for welfare of the poor.
The bill also proposes amendments to the Income Tax Act and the Finance Act to plug loopholes which may have provided tax evaders a way to legalize black money.
Since it is a money bill, the amendment will not face hurdles in the Rajya Sabha, where the ruling National Democratic Alliance is in a minority.
Opposition parties including the Congress, the Trinamool Congress (TMC) and the Biju Janata Dal (BJD) opposed the introduction of the bill, saying it should be taken up at a time when the proceedings of the House were in order.
“It is necessary that the House be in perfect order when such a key bill is discussed and that cannot be done until the discussion on demonetization takes place. The nation’s future is at stake,” TMC MP Saugata Roy said.
Roy said Jaitley introduced the bill surreptitiously when the opposition was protesting against demonetization in Parliament.
Under the new income disclosure scheme, a declarant can declare his undisclosed income, pay a tax of 30% and penalty of 10% on it and a surcharge called ‘Pradhan Mantri Garib Kalyan Cess’ of 33% on the tax, all of which totals up to around 50%. In addition, the declarant will have to deposit 25% of undisclosed income in a zero-interest deposit scheme that will be called Pradhan Mantri Garib Kalyan Deposit Scheme, 2016.
This money will be utilized for developmental activities such as irrigation, housing, construction of toilets and infrastructure, primary education and primary health.
In case the assessee does not declare the illegal income, the government proposes a tax of more than 82% and a stringent penalty in cases where such income is unearthed through search-and-seizure operation.
Sanjay Sanghvi, tax partner, Khaitan and Co., said there is no mention of exempting small deposits of up to Rs2.5 lakh in the amendments. “This is likely to create a widespread nervousness and confusion for a lot of people..,” he said.