The
Union Government has introduced the Taxation Laws (Second Amendment) Bill, 2016
in the Parliament.
It
proposes an anti – poverty scheme namely Pradhan
Mantri Garib Kalyan Yojana, 2016 (PMGKY), which mainly aims at disclosing
unaccounted cash and use that for the welfare of people living in rural areas.
Higher tax rates and penalty have been imposed in respect of undisclosed
incomes as per amendment in existing tax laws of the bill.
Black
money holders and tax defaulting assessees are subjected to a higher rate of tax
and stringent penalty provision as per this scheme.
Key features of Bill
♦
It has been made mandatory for all black money declarants to deposit 25% of such
amount disclosed in PMGKY 2016 for a lock-in-period of 4 years without
interest.
♦
Those who choose to declare their questionable wealth hoarded till now in
banned Rs. 1,000 and Rs. 500 currency notes under the PMGKY scheme shall have
to pay a tax at a flat rate of 30% of such undisclosed income.
♦
10% penalty shall be levied on such undisclosed income and PMGK Cess
(surcharge) at the rate of 33% of tax (33% of 30%) in addition to flat rate of
30%.
♦
Further, the declarants will have to deposit 25% of the undisclosed income in a
scheme to be announced by the government in discourse with the Reserve Bank of
India (RBI).
♦
The money from PMGK will be used for projects in irrigation, infrastructure,
primary education, primary health, housing, toilets and livelihood so that there
is justice and equality.
♦
Those who choose not to declare such cash shall be levied with flat rate of 60%
tax plus 25% of tax as surcharge (i.e. 75% tax shall be levied) if caught by
assessing officer.
♦
Besides, the assessing officer can charge a penalty of 10% in addition to the
75% rate of tax.
Why it is necessary?
Generally,
tax evasion prevents the nation of critical resources which could enable
Government to shoulder development and anti-poverty programmes. Honest
taxpayers are greatly affected and they shall have to bear a disproportionate
burden of higher rates of taxes to make up for the revenue leakage. Existing
expendable provisions of the Income Tax Act, 1961 which can possibly be used
for hoarding black money shall now be removed in The Taxation Laws (Second
Amendment) Bill, 2016.
Do not miss our next update on Latest Amendments.
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Some recent updates that you would not like to miss
–
1. Central
Government or State Government, on the recommendation of GST Council, can
notify a transaction to be supply of goods & services.
2. Parliament
shall likely to pass CGST, IGST, UTGST and Compensation Bills which has already
been approved by GST Council in Budget Session.
3. All
existing indirect tax assessees shall be migrated to GST in next 4 days as
31.03.2017 is the last date for GST enrolment.
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