The government announced on Friday details of a more stringent income declaration scheme, a “last chance” for tax evaders who will have to cough up 50% of their unaccounted-for wealth in tax.
The scheme– called the Pradhan Mantri Garib Kalyan Yojana (PMGKY) – was announced last month and will be operational between December 17 and March 31 next year.
“This is the last chance for people to come clean…we urge people to avail the scheme…we don’t want any kind of inspector raj on people,” revenue secretary Hasmukh Adhia said.
A person will have to pay 30% tax on the undisclosed income, a penalty of 10% on the income and a surcharge of 33% on the tax paid.
- The government has announced details of a stringent income declaration scheme for tax evaders who will have to cough up 50% of their unaccounted-for wealth in tax
- A person will have to pay 30% tax on the undisclosed income, a penalty of 10% on the income and a surcharge of 33% on the tax paid
- Another 25% of the remaining undisclosed amount will have to be deposited in a bank for four years without interest
For example, if Rs 100 is the unaccounted-for wealth, the tax will be Rs 30, the penalty Rs 10 and another Rs 9.9 the surcharge. Roughly, a person will be paying 50% of their wealth to the government.
Another 25% of the remaining undisclosed amount will have to be deposited in a bank for four years without interest.
“Beginning tomorrow (Saturday), most banks will have challans to be filled for depositing tax for availing the PMGKY scheme…only after payment of 50% tax and parking 25% of the remaining undisclosed amount for a period of four years, a person can avail the PMGKY scheme,” said Adhia.
He also said that political parties were exempt from income tax scrutiny but if the money was deposited in an individual’s account, it may be under the scanner.
The PMGKY is a tougher version of a similar income declaration scheme that ran between June and September this year. In that scheme, people had to pay 45% of their undisclosed wealth as tax but didn’t have to pay the levy upfront or put money for a lock-in period.
Adhia said the tax department had detailed information on people’s income and they would face strict action if caught after the closure of the scheme on March 31.
Adhia said the identity of those availing the scheme would be kept confidential and there would be no prosecution and penalty. However, they would not enjoy immunity from other laws, including the Prevention of Money Laundering Act or Narcotics Act, among others.
Recovering illegal or undisclosed wealth has been a priority for the government after Prime Minister Narendra Modi swept to power in 2014 on a promise to uncover “black money”. Last month, the Centre recalled Rs 1000 and Rs 500 notes in a shock move aimed at stamping out illegal cash from the economy.
“We have information regarding how much deposits have come in dormant accounts, (zero-balance) Jan Dhan accounts, urban co-operative banks, how much repayment of loans have been made in cash, RTGS transfers, withdrawal and hence the income tax department has been successful on raids,” Adhia said.
In a bid to get information about black money hoarders, the government also set up a special cell and created an email address -- email@example.com -- where anybody can provide relevant information, Adhia said.
He said the department would scrutinise people’s data in a non-intrusive manner so that the fear of inspector raj is removed from the minds of people.
Professional agencies, he added, will be engaged to do a detailed analysis of all deposits that come into the banks till December 30.
Sushil Chandra, chairman of the Central Board of Direct Taxes, said the IT department made a total seizure of Rs 393 crore since the scrapping of high-value currency on November 8, out of which 316 crore was in cash. Jewellery of Rs 76 crore and a sum of Rs 80 crore has been seized by the department, Chandra said.
He added that admitted concealed income stood at Rs 2,600 crore. “We have conducted searches and seizures in about 291 cases and carried out surveys in 295 cases,” he said.