President Pranab Mukherjee gave his assent to the Taxation Laws (Second) Amendment Bill, 2016 and the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.The scheme will start from December 17, 2016, and will run until March 31, 2017. The disclosure scheme is part of The Taxation Laws (Second Amendment) Act, 2016, which was approved by the Lok Sabha earlier this month and has been assented by the President.
Salient Features of the revised THE TAXATION LAWS (SECOND AMENDMENT) ACT, 2016:-
1) The Scheme allows people to deposit money in their accounts by paying 50% of the total amount in the manner prescribed below:
a. Thirty Pc (30%) as tax of the undisclosed income under section 199D
b. Thirty-three Pc (33%) of tax as Surcharge under section 199D
c. Ten (10%) as Penalty of the undisclosed income under Section 199E
2) As per the scheme, Taxes will have to be paid first and then the scheme can be availed on production of the tax receipt, unlike the recent Income Disclosure Scheme and other such plans wherein disclosures were made first and taxes were recovered later.
3) As per Section 199F of the said Scheme, the declarant shall have to deposit an amount which shall not be less than 25% of the undisclosed income. This amount shall not bear any interest and shall be allowed to be withdrawn after a period of four years from the date of deposit. The said sum need to be deposited before the filing of the declaration.
4) The amount of undisclosed income declared in this scheme shall not be included in the total income of the declarant for any AY under the Income Tax Act. The disclosures will be kept confidential.
5) A declaration made by misrepresentation or suppression of facts or without payment of tax and surcharge under section 199D or penalty under section 199E or without depositing the amount in the Deposit Scheme as per the provisions of section 199F, such declaration shall be void and shall be deemed never to have been made under this Scheme.
6) Declarations made under the Scheme shall not be admissible as evidence under any Act like Central Excise, Wealth Tax or Companies Act. However, no immunity will be available under criminal acts.
7) The provisions for levy of penalty for misreporting of income at the rate of 200 per cent of tax payable under section 270A of the Income Tax Act have not been amended and shall continue to apply in respect of cases falling under the said section.
8) The Taxation Laws (Second Amendment) Act 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab of the penalty of 10, 20 and 60 per cent of income has been rationalised to 30 per cent of income if the income is admitted and taxes are paid. Otherwise, a penalty of 60 percent of income shall be levied.
It seems PMGKY is the only option left with tax-evaders as any detection of unaccounted income thereafter would attract tax ranging from 83.25 per cent to 137.25 per cent.
Not declaring the black money under the proposed scheme but showing it as income in the tax return form would lead to a total levy of 77.25 per cent in taxes and penalty. In case the disclosure is not made either using the scheme or in return, a further 10 per cent penalty on tax will be levied followed by prosecution.
To get information on money launderers, the tax department has created a special email address where anyone can provide information about them. “People who have knowledge of money launderers can give direct information to us. We have created an email id: [email protected] (for the purpose),”
The views expressed are personal.