Govt to notify income disclosure scheme for taxing black money hoarders

The Parliament has given its nod to a bill that seeks to further empower tax authorities to crack down on black money, a government official confirmed on Thursday.
It will also pave the way for the government to notify its income tax disclosure scheme, giving tax evaders another opportunity to come clean but by paying higher taxes and penalties. The scheme is likely to end on 30 December.

The Taxation Laws (2nd Amendment) Bill 2016 was passed by the Lok Sabha on 29 November and was subsequently sent to the Rajya Sabha for its nod. But with the upper house failing to take up this money bill after more than 14 days, the bill is now presumed to be passed by both houses of Parliament. It will be notified by the revenue department in the ministry of finance after the President gives his assent. “Because 14 days are over since the Lok Sabha passed the bill, the revenue department will now notify it,” a senior finance ministry official said, speaking on condition of anonymity.

Constitutional expert Subhash Kashyap confirmed the procedure. “As per the rules, a money bill that is passed by Lok Sabha is presumed to have been passed by both the houses after 14 days of Rajya Sabha receiving the bill,” he said.

Finance minister Arun Jaitley introduced amendments to the Income Tax Act last month to plug existing loopholes that may have provided tax evaders a legitimate way of legalizing their undeclared income after the government announced demonetization of old Rs500 and Rs1,000 notes.

The invalidation of these notes left people with little choice but to deposit the money in their bank accounts or look for illegitimate ways of legalizing black money. In just over a month, the income tax department has conducted numerous survey operations, cracking down on jewellers and money launderers and has made huge seizures of both old and new currency notes across the country.

To give tax evaders a legitimate way out, the government proposed to introduce another income disclosure scheme called the Pradhan Mantri Garib Kalyan Yojana after an earlier scheme closed on 30 September. Under this scheme, a person can declare his undisclosed income, pay a tax, penalty and cess, all of which totals up to around 50%, and legalize his unaccounted wealth. In addition, the declarant will have to deposit 25% of undisclosed income in a zerointerest deposit scheme.
In case the assessee does not declare the illegal income, the government proposes a tax burden of more than 80% and a stringent penalty in cases where such income has been unearthed through a search operation. It also proposed to increase existing penalty rates under the Income Tax Act.

Business Standard New Delhi,16th December 2016