PM's Garib Kalyan tax scheme for black money holders opens tomorrow

The Pradhan  Mantri Garib Kalyan Yojana (PMGKY), the latest scheme that offers black money holders a chance to come clean after paying 50 per tax and a penalty thereon on their undisclosed income, will open for disclosures tomorrow.

The government on Friday said tax dodgers have time until end-March 2017 to come clean under a scheme unveiled by finance minister Arun Jaitley last month.

Announcing this at a media meet today, revenue secretary Hasmukh Adhia said black money disclosure under the PMGKY will start from tomorrow (17 December 2016 and will remain open till 31 March 2017).

Adhia said the declarations of unaccounted cash made under the scheme will be kept confidential. He also said that the black money deposited in banks post-demonetisation will not automatically turn white unless tax is paid on it.

Under the PMGKY scheme, unaccounted income can be disclosed and a 50-per cent tax and a surcharge thereon paid on the declared income to avoid harsh punishment for holding on to black money.

He further said that a new email ID has also been created for people to give information on black money to tax authorities.

People can directly contact the department with info about possible conversion of black money at email address: blackmoneyinfo@incometax.gov.in, a finance ministry release stated.

Under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), declarants will have to pay 50 per cent tax and a surcharge on their unaccounted cash deposited in banks. They will also have to park a quarter of the total sum in a non-interest bearing deposit for four years.

The Taxation Laws Bill 2016 was introduced in the Lok Sabha as money bill, which means it does not necessarily requires the assent of the Upper House of Parliament.

The constitution obliges Rajya Sabha to return a money bill passed by the Lok Sabha within a period of 14 days from the date of its receipt. The Rajya Sabha secretariat received the bill on 30 November and the bill was due to be returned by 14 December and the bill can be made a law any time after Wednesday, 14 December.

The 14-day period ended on 14 December and the bill is expected to have received President's assent for notification.

Under the scheme, the black money holder will not be asked any questions on the source of income and there will not be any wealth tax obligation. However, it does not guarantee immunity from FEMA, PMLA, Narcotics and foreign Black Money Act.

Banks in the country have received a total of Rs11,85,000 crore in old demonitised currencies of Rs500 and Rs1,000 denominations in the form of deposits since 10 November.

It was estimated that the now defunct notes constituted 86 per cent, or Rs14,50,000 crore, in circulation.

Ever since the 8 November announcement by Prime Minister Narendra Modi on the scrapping of Rs500 and Rs1,000 currency notes, holders of such notes have been depositing these in banks across the country.

Under the Pradhan Mantri Garib Kalyan Yojana, 2016' (PMGKY), undisclosed income in the form of cash and bank deposit can be declared paying a tax and as surcharge on the tax rate and after depositing 25 per cent of the total amount in interest-free deposits.

Deposit -  25 per cent of declared income to be deposited in non-interest bearing deposits for four years.