Income Tax Amendment Bill 2016

Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)

As predicted earlier by me and many others at the time of demonetisation declaration, that Black Money Holders in cash will get a relief in form of some scheme. It becomes true today, Arun Jaitley brought a scheme named “Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)” in Income Tax Amendment Bill today so that black money holders can come clear and money can be brought in economy legitimately. Key Highlights of Scheme are as under:

1.      .      Collection of approx 50% of amount declared will be collected in form of Tax and penalties as under. Further 25% of declared income to be deposited in interest free deposit scheme for Four Years.:

S. No.	Particulars	Amount
1	Cash declared	10,00,000/-
2	Income Tax @ 30%	3,00,000/-
3	Surcharge @ 33% of Tax	99,000/-
4	Penalty @ 10% of Income Declared	1,00,000/-
5	Total (2+3+4)	4,99,000/-
	Rate at which taxes are collected (5/1)	49.9%
6	Deposit of 25% of Income Declared for 4 years (Interest free but refundable)	2,50,000/-
	Amount which tax payer can retain today (1-5-6)	2,51,000/-

Further Jaitely proposes to amend other provisions of the Act, which are as under:

2.       Provisions for taxation & penalty of unexplained credit, investment, cash and other assets:

Section 115BBE:

Earlier provisions: Earlier assesse have to pay taxes @ 30% + Surcharge + cess on any unexplained cash credit and investments.

Proposed Amendment: Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx. Further under Section 271AAC, If Assessing Officer determines income referred to in section 115BBE, penalty @10% of tax payable in addition to tax (including surcharge) of 75% . So approx 85% of the Tax would be collected if assessee would not opt scheme and found unjustified.

3.       Penalty for Search and Seizure Cases:

Section 271AAB:

Earlier Provisions:

(i) 10% of income, if admitted, returned and taxes are paid

(ii) 20% of income, if not admitted but returned and taxes are paid

(iii) 60% of income in any other case

Proposed Provisions:

(i)                  30% of income, if admitted, returned and taxes are paid

(ii)                60% of income in any other case

So now onwards small slab rates has been removed for assessee’s who are currently planning to take shield of Section 271AAB.

http://fkrt.it/biIoZ!NNNN

Hence it is clear that Modi and team is ready with their armoury to dodge every assesse  engaged in tax evasion. Detailed analysis on such provisions will be updated on blog very soon. Stay connected.