What is Penalty announced for non disclosure?
In latest move to let black money holders come out government has given new scheme for them. Its last window for people with unaccounted wealth to come out clean or face stringent penalties while inviting others to blow the whistle on those suspected withholding of black money as it launched a scheme that had been announced earlier.
From Dec 17 2016, government has announced voluntary declaration of black money under Pradhan Mantri Garib Kalyan Yojana (PMGKY). People with unaccounted cash can disclose it under PMGKY that comes with 50% of tax and penalty before 31 st March 2017.The contributions received from this scheme i.e. amount deposited in PMGKY will be used for welfare of the people.
The Lok Sabha, which passed taxation laws (2nd amendment) Bill 2016, on 29th November 2016, said it proposes to levy a total tax, penalty and surcharge of 50 percent on the amount deposited post demonetization while higher taxes and stiffer penalty up to 85 percent await those who do not disclose but are caught.
According to Finance Minister Arun Jaitley had said the bill was brought after it came to the government’s notice that some people were trying to illegally exchange the demonetized Rs-1000 and Rs-500 currency notes. The amendment proposed, those caught illegally converting money will have to cough up 60 per cent plus penalties, which will come to 85%.
Those who disclose the black money i.e. the unaccounted money to banks will have to pay 50% tax, including surcharge and penalty. While they will get back 25% immediately, the rest 25% will be returned after 4 years.
If the taxpayer can substantiate the source of the deposits then there is no issue, otherwise, there is likely to be penal action as envisaged. It is important to note that past year’s tax returns and disclosure made in the same will also play critical role in substantiating the taxpayer’s claim in this regard.
As per the scheme, taxes will have to be paid first and then the scheme can be availed on production of tax receipt, unlike the recent Income Disclosure Scheme and other such plans wherein disclosures were made first and taxes recovered later.
Not declaring the black money under the scheme now but showing it in the return of income i.e. Income Tax Return would lead to a total levy of 77.25% in taxes and penalty. In case the disclosure is not made either using the scheme or in return, a further 10% penalty on tax will be levied followed by prosecution.
Tax at the rate of 30% of the undisclosed income, surcharge of 33% of tax and penalty of 10% of such income payable besides mandatory deposit of 25% of the undisclosed income in PMGKY scheme 2016. The deposits are interest free and have lock-in period of four years.
Through Financial Intelligence Unit (FIU) government is getting information about single deposit in bank account. the deposits made in dormant accounts, JAN DHAN accounts, Urban co-operative bank, how much repayment of loans have been made in cash, RTGS transfers, withdrawals hence IT department can conduct raids.
Thus, mere depositing money in bank account does not make it white.
Want to know how to be SAFE FROM INCOME TAX NOTICES? Just give a missed call on Filing Mantra helpline +91-9533990091 or Email to email@example.com, to schedule a call with our tax experts. Filing Mantra offers FREE tips and best practices on how to save tax, be compliant and safe from income tax notices.