DEEPAK KHATTAR, CHIEF OF NEWS BUREAU
BLACK MONEY HOLDERS GET LAST CHANCE TO DISCLOSE
Offering one last chance to black money holders, the government has said they have time until March-end to come clean by paying 50 per cent tax on bank deposits of junk currencies made post demonetisation. Offering tax dodgers confidentially and immunity from prosecution under the new tax evasion amnesty scheme PMGKY, which kicks-in from tomorrow, Revenue Secretary Hasmukh Adhia said non disclosure of deposits made in banks after the Rs 500 and Rs 1000 notes were junked will attract stiffer penalties as well as prosecution. Not declaring the black money under the scheme now but showing it as income in the tax return form would lead to a total levy of 77.25 per cent in taxes and penalty. In case the disclosure is not made either using the scheme or in return, a further 10 per cent penalty on tax will be levied followed by prosecution, he said. The disclosure scheme is part of The Taxation Laws (Second Amendment) Act, 2016, which was approved by the Lok Sabha earlier this month and has been assented by the President. The Pradhan Mantri Garib Kalyan Yojana ( PMGKY) will commence on December 17 and shall remain open for declarations up to March 31, Adhia told reporters here. "Beginning tomorrow most of the banks will have challans to be filled for depositing tax for availing the PMGKY scheme. Only after payment of 50 per cent tax and setting aside the 25 per cent of the remaining undisclosed amount for 4 year, a person can avail the PMGKY scheme," he said. Adhia emphasised that mere depositing of cash in banks will not convert black money into white. Taxes have to be paid. As per the scheme, taxes will have to be paid first and then the scheme can be availed on production of tax receipt, unlike the recent Income Disclosure Scheme and other such plans wherein disclosures were made first and taxes were recovered later. Also, as the disclosures will be kept confidential, the holder of unaccounted cash need not disclose it in Income Tax Returns forms. After the shock November 8 demonetisation announcement, the government allowed the junked Rs 500 and Rs 1000 notes to be deposited in bank accounts. For those holding unaccounted cash, it offered new tax evasion amnesty scheme wherein 50 per cent tax will be charged on declarations and quarter of the total sum be parked in a noninterest bearing deposit for four years. Adhia said: "Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totalling to 77.25 per cent of such income if it is declared in the income tax returns. "In case the same is not shown in the return of income a further penalty of 10 per cent of tax shall also be levied followed by prosecution." The government, he said, through the Financial Intelligence Unit (FIU) is getting data about every single deposit in bank account. Also, Income Tax, Enforcement Directorate and other investigative agencies are keeping a close watch on the information. "We have information from FIU regarding how much deposits have been made in dormant account, (zero-balance) Jan Dhan, urban cooperative bank, how much repayment of loans have been made in cash, RTGS transfers, withdrawal and hence I-T department has been successful on raids," Adhia said. With the help of professional agencies, a thorough analysis of all deposits that come till December 30 will be done to try and join all the dots, he said, adding that raids conducted so far are based on information analysis. "Mere depositing of money in bank account does not make it white. People should not make the mistake of thinking cash deposited in bank is white," he said. Till taxes are paid and full investigation is completed on the deposits that have been made in bank accounts, black cannot become white. "We want people to come forward and declare on their own unaccounted cash/deposit. The moment all the deposits come by December 30 we will analyse the voluminous data that we get. We would scrutinise all the data in a non-intrusive manner so that the fear of 'Inspector Raj' is not there in the minds of people," he added. To get information on money launderers, the tax department has created a special email address where anyone can provide information about them. "People who have knowledge of money launderers can give direct information to us. We have created a email id: blackmoneyinfo@ incometax.gov.in (for the purpose)," he said. Adhia said President Pranab Mukherjee last night gave his assent to the Taxation Laws (Second) Amendment Bill and the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 scheme will open tomorrow and end on March 31. CBDT Chairman Sushil Chandra said tax department is keeping an eye on all suspicious activities. "So the assessees should know that their deposits in bank accounts are being watched. We are examining whether it is explained money or not. Therefore, they should come very very clean under this scheme which is the last window available for anyone," he said. Giving details of the PMGKY scheme, Adhia said declaration of undisclosed income under it can be made by any person in the form of cash or deposits in an account with bank or post office or a specified entity. "Tax at the rate of 30 per cent of the undisclosed income, surcharge of 33 per cent of tax and penalty of 10 per cent of such income is payable besides mandatory deposit of 25 per cent of the undisclosed income in the Pradhan Mantri Garib Kalyan Deposit Scheme 2016. The deposits are interest free and have a lock-in period of four years," he said. The income declared under the Scheme will not be included in the total income of the declarant under the Income Tax Act for any assessment year. Also, declarations made under the Scheme shall not be admissible as evidence under any Act like Central Excise, Wealth Tax or Companies Act. However, no immunity will be available under criminal acts. Adhia said the provisions for levy of penalty for misreporting of income at the rate of 200 per cent of tax payable under section
270A of the Income Tax Act have not been amended and shall continue to apply in respect of cases falling under the said section. The Taxation Laws (Second Amendment) Act 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab of penalty of 10, 20 and 60 per cent of income has been rationalised to 30 per cent of income, if the income is admitted and taxes are paid. Otherwise a penalty of 60 per cent of income shall be levied. Taxman Director Rakesh Bhargava said that PMGKY is the only option left with tax-evaders as any detection of unaccounted income thereafter would attract tax ranging from 83.25 per cent to 137.25 per cent. "Taxpayers are advised not to make declaration of third party money under PMGKY," he said. Meanwhile, the Reserve Bank has issued operational guidelines for Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016. According to the guideline, quoting PAN is mandatory for making declaration under the scheme. "...if the declarant does not hold a PAN, he shall apply for a PAN and provide the details of such PAN application along with acknowledgement number," the RBI said. Further, the application should be accompanied by an amount which should not be less than 25 per cent of the undisclosed income declared under Taxation and Investment Regime for PMGKDS tendered in the form of cash or draft or cheque or through electronic transfer. Also, no commission/agency bank charges will be paid to the banks for accepting deposits under the scheme or for servicing the declarants.
DEMONETISATION, GST TO CREATE LARGER, CLEANER ECONOMY: JAITLEY
Finance Minister Arun Jaitley has said demonetisation may impact growth "for a quarter or so" but this disruption will not last too long and the move along with GST will help create a larger and cleaner economy. "I have least doubt in my mind that (one year from now) you will have a bigger economy, higher GDP, cleaner GDP. You will have a higher tax base and more money in banks, and probably interest rates will be more reasonable. Therefore, all these collectively could contribute a lot as far as GDP is concerned," he said. Both the economy and social system will see a major transformation after the implementation of the Goods and Services Tax (GST) post demonetisation. "I personally believe that once the remonetisation process is complete and the GST is implemented, it's going to hugely impact India's businesses and also the Indian way of life. "You will have more of digitised expenditures, you will have a taxation system far more efficient, which is extremely difficult to evade, where each limb of the transaction is being captured," he said. As far as the negative impact of demonetisation is concerned, Jaitley said, "When you switch over, it creates disruption. I don't see disruption lasting too long. You may see the impact for a quarter or so. Then when you look at next 12-15 quarters, it's certainly going to benefit." Citing a few economic trends post demonetisation, the Minister said rabi sowing this season has been higher than last year, while auto sales were a mixed bag. "Of course, you will have some disruption created because of the switchover, in the long run, advantages are going to be huge as far as the relative cost of disruption is concerned," Jaitley said. Speaking about the various advantages of the demonetisation,
the Finance Minister said, it could lead to reduction in interest rates. "Rates will now hopefully at some stage come down. With more money in the taxation system, our base itself increases," he said. As far as inflow from demonetisation is concerned, he said it would come from many sources including higher tax penalty to be levied on unaccounted money. Jaitley further said that low-cost deposit due to demonetisation will increase and therefore the ability of banks to use that money suddenly improves for reasonable cost lending in various sectors like social, infrastructure, industry and trade. "So, that boosts the economy. There could be another limb, that money which was not deposited, then goes to the credit of the RBI. And that money can be constructively used. And of course the third limb, the immediate advantage that you will have of these money, that are even being deposited and which are liable for exemplary taxation," he said. And the fourth limb, he said, base of taxation for direct and indirect would expand. Noting that security printing of currency is a fairly complicated and time-consuming exercise, the Finance Minister said, replacement of large volumes of currency required calibrated move by the RBI otherwise it would lead to malpractices. "If you suddenly release entire thing in one go then there would be market malpractices and therefore remonetisation process is not instantaneous but it would be spread over a couple of weeks," he said. Acknowledging that long queues were factored in during the decision-making process of demonetisation, the Finance Minister appreciated that people have cooperated immensely and those standing in queues were disciplined. "The country by and large has welcomed this decision," he said, adding there will be a very significant amount of currency that will be released into the market by December 30. "One of the significant advantages of this would be you won't have the same level of currency which existed on November 8... the level of paper currency will shrink, you should not expect the same level of paper currency coming back and it would be lesser. The balance would be replaced by other modes credit, debit cards, e-wallets," the FM said. Emphasising that people are already moving towards digital transactions, he said out of 80 crore credit and debit cards, 45 crore cards are in active circulation. Besides, there are 23 crore e-wallets that started less than oneand-a-half years ago, he added. "Both in politics and media, you find difficult to digest these figures but the country is changing much faster than what we think," Jaitley said