Less than two months after an earlier income disclosure scheme for the black money holders, the government has come up with another income disclosure scheme.
However, the new proposal carries more stringent and has a higher compliance burden for the errant tax payers.
The proposal also entails that the money collected from such a scheme will be channeled into a fund for the welfare of the poor.
This essentially means those who left stranded after the old notes were scrapped now have another chance to voluntarily declare their illegal income.
Many believe this step is a face-saving move to mitigate the political fall out of demonetization which has hurt the poor across the country.
The proposal is a part of the Income Tax Amendment Bill introduced in Lok Sabha by finance minister Arun Jaitley.
Income Tax Amendment Bill, 2016
Arun Jaitley, finance minister introduced in the Lok Sabha the proposal to amend the taxation laws bill 2016 which includes the new ‘Pradhan Mantri Garib Kalyan Yojana, 2016’
The income disclosure scheme proposes that the errant income tax payer will pay nearly 50% penalty which includes a 30% tax, a penalty of 10% on the undisclosed income and a 33% surcharge (called ‘Pradhan Mantri Garib Kalyan Cess’) on the tax.
Moreover, the tax payer must also deposit 25% of the undisclosed income in a a zero-interest deposit scheme called Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, as per the government proposal. The money raised through this scheme will be utilized for several welfare schemes such as irrigation, housing, construction of toilets and infrastructure, primary education and primary health.
The government proposes a higher burden – a 80% tax on the undisclosed income and a stringent penalty if any black-money holder is searched and found to have any undisclosed income.
The proposal has been tabled as a money bill in a bid to avoid any challenge of clearing Rajya Sabha where the govt is in a minority.