In the past one month or so, there has been a wave of changes introduced due to the demonetisation process carried out by the Modi government. Besides a general ban on the old 500 and 1000 notes, in the recent days, there were many announcements made regarding gold and related schemes.
Somewhere in all this, there have been indications of measures being taken for streamlining the Taxation system in the country. Some of the proposed amendments in the Income Tax Act are:
- Individuals with unaccounted cash or deposits of cancelled Rs 500 and Rs 1,000 notes will pay 50% tax
- Out of the amount declared, a quarter would be locked up for four years in interest free deposits, leaving such declarant with only 25% of funds for immediate use.
- The law also declares that there would be taxes imposed in the following manner:
- Up to 60% (tax + penalty) – if it’s admitted and return is filed
- 90% (tax + penalty) on cash seized in searches.
- All individuals who declare their black money will have to mandatorily deposit 25% of the amount disclosed in anti-poverty scheme; that too, in schemes without interest and a four-year lock-in period.
- Those who choose to declare their ill-gotten wealth stashed till now under the Pradhan Mantri Garibi Kalyan Yojana 2016 –
- Will have to pay a tax at the rate of 30% of the undisclosed income.
- And additional 10% penalty will be levied on the undisclosed income and surcharge called PMGK Cess at the rate of 33% of tax (33% of 30%).
- All such declarants will have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).
- If some individual is caught holding on to undisclosed cash, the existing provisions of the Income Tax law would be amended to provide for a flat 60% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%.
- The declarant will have to pay a tax of 60 per cent and an additional surcharge of 25 per cent of the tax (i.e. 15 per cent of such income), resulting in a total tax component of 75 per cent.
- Besides, if the assessing officer decides he can charge a 10% penalty in addition to the 75% tax.
- Service tax will not be levied on tickets booked through the IRCTC website from 23 November to 31 December – Rs. 20 would be levied as service tax on Sleeper and Rs. 40 on AC classes for booking tickets through IRCTC.
- On November 23, the government also asked banks towaive the merchant discount rate (MDR) or transaction fee charged on debit card payments until 31 December, 2016..
- In moves to strengthen and support the rural sector, the government also decided that it will provide Rs21,000 crore to district central cooperative banks (DCCBs) through NABARD to provide loans to farmers.
- RBI has provided anadditional 60 days for repayment of housing, car, farm and other loans worth up to Rs. 1 crore.
- The money from the scheme would be used for projects in irrigation, housing, toilets, infrastructure, primary education, primary health and livelihood so that there is justice and equality.
In the past few weeks, the government has been declaring various steps to flush out the economy of black money and improve the structure of the financial system. In the context of the steps being taken, there are frequent announcements made. While we try and bring the latest to you on a daily basis, sometimes there could be a variation in the data available. We suggest that you do verify all facts from the official RBI website too www.rbi.org.in , for all relevant information.