Monday, 27 March 2017

Union Govt. Introduced Taxation Laws (Second Amendment) Bill, 2016

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.

Have a great day ahead!

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