Demonetization has become the most trending topic in India from last couple of weeks as PM Narendra Modi has declared the discontinuation of rs 500 & Rs 1000 notes as legal tenders. The main purpose of this move is to make the black money hoarders cash useless and bring back in the banking system.
But people are even more smarter and they have come up with various ways to convert black money to white money. later on Govt has tighten the rules more to stop such activities and out of which few of them are like
- Stop the currency exchange of rs 500 & Rs 1000 notes.
- Rs 10000 restriction on withdrawal limit from Jan Dhan Accounts
- And now the changes in old income tax rules with the new tax amendments 2016.
What is Black Money Declaration Scheme with 50% Income Tax
As per the existing provisions of the Income-tax Act, 1961 (‘Act’), there are certain loopholes which could possibly be used for concealing black money. Finance minister Arun Jaitley has proposed the new changes in the existing income tax rules to curb the usage of black money.
Here are few of the facts one should know about this new Black Money Declaration Scheme – Things You Should Know are
- Although the money exchange scheme has stopped now, one can deposit the old currency of Rs 500 and Rs 1000 notes till December 30th 2016. If you deposit more than Rs 2.5 lakh, then that will be reviewed by the tax officials and a tax penalty can be levied in case any miss match of income and deposit.
- If any undisclosed income is determined by AO or Assessment Officer then it would be taxable at 83.25% (i.e., 60% tax, 15% surcharge, 6% penalty* and 2.25% Cess). Further, no penalty will be levied for under-reporting and misreporting of income under Section 270A.
- In case you self-declare about your black money then you will get a relaxation in tax penalty. Govt has launched a new scheme called Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016, which will allow people to deposit money till April by paying 50 per cent of the total amount ( 30 per cent as tax, 10 per cent as penalty and 33 per cent of the taxed amount, that is 10 per cent as Garib Kalyan Cess) which is almost 50% tax.
- Now 25% of the amount the depositor will have after deducting the tax will be deposited for 4 year lock-in period without earning any interest. That means the depositor will get only 25% of the unaccounted money.
So, the purpose of the scheme is to bring the black money to the system and distribute the same to improve irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood creation for the poor or needy people of India.
Share your thoughts and views on this Black Money Declaration Scheme and do you think this scheme will really be able to bring black money into our banking system?