After the late night cabinet meeting which was reported to have been called urgently comes news that the Cabinet has given its nod for 60% income tax to catch black money holders. The Union Cabinet decided to introduce a proposal to amend the Income Tax (IT) Act to levy close to 60% deduction on unaccounted deposits in banks above a threshold, after the demonetization drive. There were news reports of banks pointing out that over Rs. 21,000 crore had being deposited in zero-balance Jan Dhan accounts in two weeks after the 500 and 1,000 rupee notes were banned.
It has been suspected that this large amount of money could possibly be black money stashed away from the formal banking system. Hence such a move by the government could corner those who had been hoarding cash at homes or elsewhere.
Those individuals who deposited their black money in banks after Modi announced Rs 1000 and Rs 500 currency notes will be banned, disclosing it to be untaxed wealth, will now have to pay income tax at 50%. A quarter of the portion of the unaccounted income would remain with the government for four years, as per amendments planned to the Income Tax Act by the Centre.