Arjuna (Fictional Character): Krishna, Government has brought up with a scheme to convert 50:50% of black money into white money which will be applicable from 17th December 2016, what is it? And what is aim of this scheme?
Krishna (Fictional Character): Arjuna, after 8th November, Government has collected till the time approx. an amount of 13.4 lac crore in form of old 500 and 1000 Rupee Notes which were deposited in banks. Our nation has plenty of black money, still huge cash is deposited in bank accounts, so government has brought up this 50 Percent scheme to give one last chance to rich ones. People have used different ways to deposit their money in bank accounts. Now Income Tax department and Government are trying to catch them through many ways. It is expected that Income tax department will send notice to many who has deposited their money in bank. This scheme has come up for those who have deposited incalculable amounts in their bank accounts. This scheme got approval of President on 16th December 2016 and the due date of the same is kept from 17th December 16 to 31st March 17. It is said that the information provided under this scheme will be kept confidential. The Target of this Scheme set by Government is 2 Lakh Crore Rupees.
Arjuna (Fictional Character): Krishna, What are the main features of this scheme?
Krishna (Fictional Character): Arjuna, Government has named this scheme as "Pradhan Mantri Garib Kalyan Yojna" 2016. The following are the features of this scheme-
- Any person can participate under this scheme only after considering the rules of the scheme. The person needs to give a declaration through Form-1 which is to be submitted to Income tax principal commissioner. In this Form-1 details of PAN, income declared, details of bank in which deposit was made, challan details of tax paid and information relating to 25% deposit made is to be given before 31st
- The Income tax department will give Form-2 as a receipt within 30 days of submitting Form-1 by the person.
- No deduction of expense will be given against the income declared under the scheme. Even any amount of loss will not be available as a set off against the income declared.
- The income declared in this year will be taxed in this year only even if the income is of any previous year.
- No assessment will be re-opened against the person participating in this scheme.
Arjuna (Fictional Character): Krishna, what are the taxes & penalties levied under this scheme?
Krishna (Fictional Character): Arjuna, the person participating in this scheme has to pay 30% tax; a surcharge will be levied @33% on the tax amount which is named as “Pradhan Mantri Garib Kalyan Cess”. The person is also liable for a penalty @10% thus the total amount of taxes and penalty goes to 50% of the income declared. For Example – the person is having 1 Crore of undisclosed income and he discloses under this scheme than the person is liable to pay 30 Lacks as tax amount, 9.9Lacks surcharge,10 Lacks as penalty which comes to 49.9Lacks and 25Lacks as a deposit for the period of 4 years. Only after that his declaration will be registered.
Arjuna (Fictional Character): Krishna, what are the rules relating to 25% deposit in this scheme?
Krishna (Fictional Character): Arjuna, RBI will open Bank Ledger Account. In that a certificate will be given through Form-1. In Form-2 an application for deposit is to be made. It should be according to 25% of undisclosed income. The amount is to be deposited at a time by either cash or through bank. The deposit amount will be linked through PAN number. The detail of Nomination is to be given in Form-3. If any changes requires in Nomination information given in Form3 than details are to be submitted in Form-4. The Form-1 deposit certificate cannot be transferred or sold to another person. No interest will be given on deposited amount. After 4 years the deposited money will be given back. This deposit certificate is to be attached with the declaration given in the Form-1.
Arjuna (Fictional Character): Krushna, what are the precautions to be taken of old 500 & 1000 rupee notes by the participating persons in this scheme?
Krishna (Fictional Character): Arjuna, even though the last date for participating in this scheme is 31st March 2017 but last date for depositing old notes in bank is 30th December 2016. The person who wants to participate in this scheme has to deposit old notes before 30th December 2016 and give declaration before 31st March 2017. If the person fails to deposit notes before 30th December 2016 than he has to deposit his money in reserve bank before 31st March 2017 also give declaration before 31st march 2017. Government has not provided clarity relating to above point. Even no information is provided if the person wants to participate in this scheme by depositing new notes. Further those who have deposited already cash in bank accounts in the year 2016-17, are also eligible for not, etc. Clarification on this point may come afterwards.
Arjuna (Fictional Character): Krishna, if any person has undisclosed income and he does not declare his income under this scheme than what will happen?
Krishna (Fictional Character): If the person now declares his income not under this scheme than tax on such amount will be levied @60% and 25% surcharge on the tax amount will be levied i.e 75% is to be paid and return has to be filled. For example- If a person is having undisclosed income of 1crore and he does not opt for this scheme than he is liable to pay 60lacks as tax and 15lacks of surcharge approximately 75lacks. But if officers finds out in Assessment, then who admits to disclose the undisclosed income than he will be liable to pay tax @60% of the undisclosed income, 15% of surcharge on the tax amount and 10% as penalty which come to 81% of the income. If search, survey is conducted and undisclosed income is found then, amount to be paid in form of taxes can go up to 135%.
Arjuna (Fictional Character): Krishna, what lesson we should learn?
Krishna (Fictional Character): Arjuna, the Government has provided detailed description of this scheme through Notification given on 16th December 2016. Now under “Pradhan Mantri Garib Kalyan Yojna” the government will keep 50% of the income and 50% will be of assessee. The other aspects of this scheme will be explained soon. It is last chance given to rich ones so they should take benefit of the scheme for their own welfare otherwise they may become poor. Don’t know how much welfare will be given to poor ones and how much welfare will be taken by rich ones. It is hope of True Tax payers that through this scheme there will increase in not only welfare of the people but welfare of the country. Only at the end of the scheme we can know whether it’s a “Garib” Kalyan Yojna, for “Kalyan” of Rich or Poor?
Tags Income Tax