Modi govt comes up with new taxes for money deposited under demonetisation
The Centre on Monday unveiled a new tax structure for money deposited into banks after November 8, the date Prime Minister Narendra Modi struck Rs 1000 and Rs 500 off legal tender status.
Under the scheme which aims to provide a window to black money holders, Finance Minister Arun Jaitley introduced a bill to amend the Income Tax statute. There will be a total tax, penalty and surcharge of 50 per cent. Those who have not deposited or declared their money but are caught later will have to pay fines at penal higher rates up to 85 per cent.
There is a mandatory four year lock-in of 25 per cent of the money without interest which will be used for social welfare schemes.
Those who declare their stashed wealth under the Pradhan Mantri Garib Kalyan Yojana 2016, will have to pay a tax of 30 per cent on the undisclosed income. Another 10 per cent penalty will be levied on the undisclosed income and surcharge called PMGK cess at the rate of 33 per cent of tax.
The locked-in money would be used for irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood projects.
But those who don’t declare and continue to hold onto undisclosed cash and are caught, the applicable tax is set at a flat 60 per cent plus a surcharge of 15 per cent, which will amount to a total 75 per cent.
The further 10 per cent charge can be imposed as per the discretion of the tax officer.