Income Tax Rules on bank deposits: Key highlights as of 28 November
New Delhi: Twenty days after Prime Minister Narendra Modi announced a ban on the Rs500 and Rs1,000 currency notes, Finance minister Arun Jaitley introduced the taxation laws (second amendment) bill, 2016 in the Lok Sabha on Monday in a bid to attract more people to disclose their unaccounted cash and also to put in a framework in place to use that for the welfare of the people especially in the rural areas.
The major highlights of the Bill are:
• The proposed amendments provide for black money declarants to mandatorily deposit 25% of the amount disclosed in anti-poverty scheme without interest and a four-year lock-in period.
• Those who choose to declare their ill-gotten wealth stashed till now in banned Rs500 and Rs1,000 currency notes under the Pradhan Mantri Garibi Kalyan Yojana 2016, will have to pay a tax at the rate of 30% of the undisclosed income.
• Additionally, a 10% penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33% of tax (33% of 30%).
• Further, the declarants have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).
• The money from the scheme would be used for projects in irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood so that there is justice and equality, said the Statement of Objects and Reasons of the Bill.
• For those who continue to hold onto undisclosed cash and are caught, existing provisions of the Income Tax law will be amended to provide for a flat 60% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%.
• Besides, if the assessing officer decides he can charge a 10% penalty in addition to the 75% tax.