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.
PMGKY shall commence on 17 Dec. 2016 and shall remain open for declarations up to 31 March, 2017. Also CBDT has notified PMGKY Scheme Rules 2016 and PMGK Deposit Scheme Rules 2016.
Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totaling to 77.25% of such income, if declared in the return of income. In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied followed by prosecution. It may be noted that the provisions for levy of penalty for misreporting of income @200% of tax payable under section 270A of the Income-tax Act have not been amended and shall continue to apply with respect to cases falling under the said section.
The Taxation Laws (Second Amendment) Act, 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab for penalty of 10%, 20% & 60% of income levied under section 271AAB has been rationalised to 30% of income, if the income is admitted and taxes are paid. Otherwise a penalty @60% of income shall be levied.
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
(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.)
25% of declared income to be deposited in interest free Deposit Scheme for four years.
Related Notifications/ Press Release on PMGKY
i) Press Release of CBDT on PMGKY 2016
ii) PMGK Deposit Scheme 2016 notified
iii) CBDT Notifies 17 Dec. 2016 as opening date and 31 March 2017 as closing date for PMGKY
iv) CBDT Notifies ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana (PMGKY) Rules, 2016’
v) Jurisdiction over PMGKY Scheme Notified
vi) Govt. proposes to launch PMGKY Scheme 2016