The Government has announced demonetization of existing currency of Rs. 500/1000 with effect from the 9th November, 2016. However, concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 ('Act') could possibly be used for concealing black money. So, the Government has introduced Taxation Laws (Second Amendment) Bill, 2016 in the Lok Sabha to amend the provisions of Income-Tax Act.
The Government has announced Pradhan Mantri Garib Kalyan Yojana 2016 (PMGKY) in the Taxation Laws (Second Amendment) Bill, 2016. As per this PMGKY black money deposited in banks or held in cash can be offered for taxation at 49.9% (i.e., 30% tax, 9.9% surcharge and 10% penalty).
Q1. Who can make a declaration under PMGKY?
➢ "Any person" can make declaration as PMGKY available to every person (whether resident or non-resident)
➢ Non-resident Indians, Foreign Citizens & Foreign Companies can make declaration under PMGKY.
➢ Trustee can make a declaration on behalf of the beneficiary of a trust.
➢ Beneficiary can make separate declaration of his other income.
➢ Amalgamating company or a company which has converted itself into LLP cannot make declaration as entity no more exists.
➢ Declaration can be filed on behalf of a deceased individual/a partitioned HUF/a Company-in-liquidation/a dissolved firm/a dissolved private trust.
➢ Declaration can be made by a person who has not filed ITR in the past.
➢ If firm has undisclosed income, declaration shall be made by the firm.
➢ Partner cannot declare firm's income in his name.
➢ Partner may declare his undisclosed income in his name.
➢ Company can declare its undisclosed income.
➢ Govt. servant can declare undisclosed income inherited by him from his deceased parents provided he can prove that it was really inherited by him.
➢ Person who has received notice under section 142/143(2)/148/153A/153C can make declaration.
➢ Person searched (raided) or surveyed can also make declaration.
Q2. Who cannot make a declaration under PMGKY?
➢ Any person in respect of whom order of detention made under COFEPOSA, 1974.
➢ Any person notified as accused in respect of securities scam of 1991-1992.
➢ Any person liable to be prosecuted under Chapter IX or Chapter XVII of IPC, 1860.
➢ Any person liable to be prosecuted under NDPS Act, 1974.
➢ Any person liable to be prosecuted under Unlawful Activities (Prevention) Act, 1967.
➢ Any person liable to be prosecuted under Prevention of Corruption Act, 1988.
➢ Any person liable to be prosecuted under Prohibition of Benami Property Transactions Act, 1988.
➢ Any person liable to be prosecuted under Prevention of Money-Laundering Act, 2002.
➢ Person against whom FIR filed under any of the above Acts can declare if charge sheet was not filed nor summons issued.
Q3. Which income can be declared under PMGKY?
➢ Undisclosed income which is taxable under the Income-tax Act, 1961 and in the form of cash or deposit in an account with a specified entity can be declared.
➢ Undisclosed income in the form of jewellery, bullion, diamonds, other valuables can be declared after selling them and converting them into cash or getting their sales proceeds credited to bank account.
➢ Cash or deposits with specified entities.
➢ 'Black' received in cash in property sales can be declared.
➢ Deposits in PPF account can be declared
➢ NSC cannot be declared
➢ RD balance in bank/post offices can be declared
➢ Deposits with NBFCs can be declared if they are notified as 'specified entities'
➢ Deposits with co-operative societies can be declared if they are notified as 'specified entities'
➢ Deposits with Post Office can be declared
➢ It appears credit of TDS in Form 26AS will be available for payment under the Scheme to the extent not claimed in ITR filed.
Q 4. Which income cannot be declared under PMGKY?
➢ Undisclosed income in the nature of "Red money" i.e. proceeds of crime, drugs, terrorism, benami property, money-laundering cannot be declared.
➢ Undisclosed foreign income/asset chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 cannot be declared.
➢ Undisclosed income in the form of jewellery, bullion, diamonds, other valuables, NSCs, investments in capital of firms etc. cannot be declared.
Q5. For which assessment years can declaration be made?
➢ Income chargeable to tax under Income-tax Act for any assessment year commencing on or before 1-4-2017 can be declared.
Q6. What is the rate of tax, surcharge, penalty, interest and deposit under the PMGKY?
➢ Tax @ 30% of declared undisclosed income
➢ Pradhan Mantri Garib Kalyan Cess @ 33% of tax i.e. 9.9% of declared undisclosed income.
➢ Penalty @10% of declared undisclosed income.
➢ Total payment to be made (tax plus PMGKY cess plus penalty) @ 49.9% of declared undisclosed income.
➢ Deposit @ 25% of declared undisclosed income in PMGKY non-transferable non-interest-bearing bonds for 4 years.
➢ Payment of 49.9% as well as deposit of 25% to be made before filing declaration.
➢ Proof of payment and deposit to be attached to declaration.
➢ Last date of declaration to be notified by Govt.
➢ No Education cess
➢ No Surcharge
➢ No Penalty under Section 270A
➢ No interest under section 234A or 234B or 234C
➢ Tax, cess and penalty paid are non-refundable
➢ No rounding off of undisclosed income declared
➢ No rounding off of tax payable under PMGKY