All about the “The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY 2016)” and “The Pradhan Mantri Garib Kalyan Deposit Scheme 2016 (PMGKD Scheme 2016)”
The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY 2016) has commenced since 17 Dec. 2016 and last date for declarations under the Scheme has been extended upto 10 May 2017.
The Scheme provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity (which includes banks, post office etc.) to declare such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent. of such declared income.
Besides, the Scheme provides that a mandatory deposit of not less than 25% of such income shall be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (PMGKD Scheme 2016).
Highlights of the Amendments under Income Tax for PMGKY
The salient features/ highlights of the PMGKY Scheme are as under:
(i) Declaration under the Scheme can be made by any person in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.
(ii) Tax @30% of the undisclosed income, surcharge @33% of tax and penalty @10% of such income is payable besides mandatory deposit of 25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The deposits are interest free and have a lock-in period of four years.
(iii) The income declared under the Scheme shall not be included in the total income of the declarant under the Income-tax Act for any assessment year.
(iv) The declarations made under the Scheme shall not be admissible as evidence under any Act (eg. Central Excise Act, Wealth-tax Act, Companies Act etc.). However, no immunity will be available under Criminal Acts mentioned in section 199-O of the Scheme.
Further comparative information on the PMGKY in tabular form is as under:
|PARTICULARS||EXISTING PROVISIONS||AMENDED PROVISIONS|
|General provision for penalty||PENALTY (Section 270A): Under-reporting – @50% of tax; Misreporting – @200% of tax; (Under-reporting/ Misreporting income is normally difference between returned income and assessed income)||No changes proposed|
|Provisions for taxation & penalty of unexplained credit, investment, cash and other assets||TAX (Section 115BBE): Flat rate of tax @30% + surcharge + cess (No expense, deductions, set-off is allowed)||TAX (Section 115BBE): Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx. (No expense, deductions, set-off is allowed)
PENALTY (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%.
|Penalty for search seizure cases||Penalty (271AAB): (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||Penalty (271AAB): (i) 30% of income, if admitted, returned and taxes are paid; (ii) 60% of income in any other case|
|Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)||New Taxation and InvestmentRegime||Undisclosed income in the form of cash & bank deposit can be declared:
(A) Tax, Surcharge, Penalty payable: Tax @30% of income declared; Surcharge @33% of tax; Penalty @10% of income declared: Total @50% of income (approx.)
(B) Deposit: 25% of declared income to be deposited in interest free Deposit Scheme for four years.
Related Notifications/ Press Release on PMGKY
i) Extension of Last Date under PMGKY/ PMGKD Scheme 2016
Representations have been received from the stakeholders stating that in some cases; tax, surcharge and penalty have been paid on or before 31 Mar. 2017 but the corresponding deposit under the PMGKD Scheme 2016 could not be made by the said date.
Accordingly, the last date has been extended for making deposits, under the Scheme, upto 30 Apr. 2017, in respect of cases where tax, surcharge and penalty under PMGKY has been paid on or before 31 Mar. 2017.
Further, the last date for filing of declaration under PMGKY has been extended from 31 Mar. 2017 to 10 May 2017 in the cases where tax, surcharge and penalty under PMGKY has been paid on or before the 31 Mar. 2017, and deposit under the Deposit Scheme has been made on or before the 30 Apr. 2017.
ii) Clarifications on the PMGKY 2016
CBDT clarifies that declaration in Form No. 1 under the PMGKY can be filed upto 10 April, 2017.
iii) IT Deptt. to remain open on 31 Mar. 2017 (till midnight) to facilitate filing of Declarations under PMGKY 2016 by Declarants
The last date for making declaration under the PMGKY 2016 is 31 Mar. 2017. Therefore, to facilitate the filing of declarations under PMGKY 2016 even after the office hours on 31 Mar. 2017, the CBDT has directed the designated offices/ field formations of the Income Tax Deptt. for receiving such declarations till midnight of 31 Mar. 2017 in all jurisdictions.
iiib) CBDT Clarification on existence of Cash/ Deposit on the declaration date:
iv) CBDT’s FAQs on PMGKY 2016 Scheme
CBDT received various queries from stakeholders seeking clarifications about provisions of the Scheme. The issues raised have been examined by the CBDT and a set of 12 Nos. FAQs has been issued to clarify the same in the form of questions and answers as follows:
v) CBDT’s Explanatory Notes on the Provisions of PMGKY 2016 Scheme
CBDT has issued a Circular on Explanatory Notes relating to the provisions of the PMGKY Scheme, 2016, including on topics like, Scope, Time limits for Declaration/ Tax Payment (Tax, Surcharge, Penalty)/ Deposits under PMGKD Scheme, Form/ Mode and Procedure for Filing Declaration along with effect thereof, Cases where Declaration can’t be filed or declarations filed are invalid, etc., as under:
vi) Tax Payments/ Deposit under PMGKY 2016 in Old Currency
CBDT has advised that the payment of tax, surcharge and penalty under the PMGKY Scheme 2016 can be made using challan ITNS- 287 and the deposits are to be made in ‘Pradhan Mantri Garib Kalyan Deposit (PMGKD) Scheme, 2016. Further, it has clarified that demonetized currency of Rs. 500/ 1000 can be used for these purposes till 31 Dec. 2016.
vii) CBDT Notifies Jurisdiction of PMGKY Scheme 2016
The CBDT has notified two separate jurisdictions relating to declarations filed i) manually or using EVC & ii) using DSC under PMGKY Scheme, 2016 relating to declaration of undisclosed income/ unaccounted cash, as under:
viii) CBDT Notifies PMGKY Rules, 2016
The CBDT has notified the ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana (PMGKY) Rules, 2016 along with Form 1 and Form 2, relating to declaration of undisclosed income/ unaccounted cash, as under:
ix) CBDT Notifies 17 Dec. 2016 as opening date and 31 March 2017 as closing date for PMGKY Scheme 2016
The CBDT has notified that the PMGKY shall remain open during the period from 17 Dec. 2016 (opening date) and 31 March 2017 (closing date) for declaration of undisclosed income/ unaccounted cash, as under:
x) RBI’s Operational Guidelines on PMGKD Scheme 2016
The deposits under the PMGK Deposit Scheme shall be equal to 25% of the undisclosed income declared under the PMGKY Scheme and such deposits can be made with the authorized banks notified by Govt. in this regard from 16 Dec. 2016 31 Mar. 2017. Such deposits shall be held at the credit of the declarant in Bonds Ledger Account (BLA) maintained with RBI and would be repaid on expiry of four years without any interest. Accordingly, the RBI has issued operational guidelines for Banks for adherence in accepting deposits under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016’, relating to application form, KYC, interest, etc., as under:
xi) Govt. Notifies PMGKD Scheme, 2016
Govt. has notified ‘Pradhan Mantri Garib Kalyan (PMGK) Deposit Scheme, 2016’ for deposit under the Scheme by any person who makes declaration under PMGKY Scheme 2016 of Undisclosed Income/ Unaccounted Cash, as under:
xii) Govt. Notifies PMGKY Scheme 2016 for Declaration of Undisclosed Income/ Unaccounted Cash
Govt. has notified the PMGKY Scheme 2016 which is open from 17 Dec. 2016 to 31 Mar. 2017 for Declaration of undisclosed Income/ unaccounted cash in line with the provisions of the ‘Taxation Laws (Second Amendment) Act, 2016’, which has come into force on 15 Dec. 2016.