PMGKY: What We Know About The New Income Disclosure Scheme

The new income disclosure scheme under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) allows people to deposit money in their accounts till 1 April 2017 by paying 50 per cent of the total amount - 30 per cent as tax, 10 per cent as penalty and 33 per cent of the taxed amount (33 per cent of 30 per cent, which is around 10 per cent) - as Garib Kalyan Cess.

Further, the declarants have to deposit 25 per cent of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India.

According to the Statement of Objects and Reasons of the Bill, 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.

The Statement also said:

For those who continue to hold on to undisclosed cash and are caught, existing provisions of the Income Tax law will be amended to provide for a flat 60 per cent tax, plus a surcharge of 25 per cent of tax (15 per cent), which will amount a levy of 75 per cent.

Besides, if the assessing officer decides, he can charge a 10 per cent penalty in addition to the 75 per cent tax.

The current provisions of penalty on under-reporting of income at 50 per cent of the tax, and misreporting (200 per cent of tax) remain.

Against current provision of 30 per cent flat tax rate plus surcharge and cess, a steep 60 per cent tax will be levied on such income together with 25 per cent surcharge of tax (15 per cent of such income). So total incidence of tax will be 75 per cent with no expense, deductions or set-off allowed. Also, the assessing officer can levy an additional 10 per cent penalty, taking the total tax incidence to 85 per cent.

With inputs from PTI, IANS