Providing a window to black money holders, the government on Monday proposed to collect a total tax, penalty and surcharge of 50 % on the amount deposited post demonetization while high taxes and stiffer penalty of up to 85 % expect those who don’t disclose but are caught.
About three weeks after Prime Minister Narendra Modi announced removing high denomination 500 and 1000 rupee notes, Finance Minister Arun Jaitley introduced a bill to modify the Income Tax law which also provides for black money declarants a mandatorily depositing of 25 % of the amount disclosed in anti-poverty plan without interest and a four-year lock-in period.
Those who choose to declare their illegal wealth stored till now in banned 500 and 1000 rupee notes beneath the Pradhan Mantri Grabi Kalyan Yojana 2016, will have to pay a tax at the rate of 30 % of the undisclosed income.
Moreover, a 10 % penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33 % of tax (33 percent of 30 percent).
Additionally, the declarants have to deposit 25 % of the undisclosed income in a plan to be notified by the government in consultation with the Reserve Bank of India (RBI).