17 December 2016 Current Affairs: The Pradhan Mantri Garib Kalyan Yojana (PMGKY) notified along with other provisions of Taxation Laws (Second Amendment) Act, 2016 came into effect from 17 December 2016. It will remain open until March 31, 2016. PMGKY is Union Government’s second income disclosure scheme (IDS) to allow tax evaders to come clean with unaccounted wealth. It provides for 50 per cent tax and surcharge on declarations of unaccounted cash deposited in banks.
Declaration under it 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. Declarant of undisclosed income needs to pay 30% tax, 10% penalty and 33% Pradhan Mantri Garib Kalyan Cess on the tax, all of which add up to around 50%. Besides, declarant must make mandatory deposit of 25% of undisclosed income in the zero-interest Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 with lock-in period of 4 years.
The income declared under it will not be included in the total income of the declarant under the Income-tax (IT) Act for any assessment year. Besides, declarations made under it will be kept confidential and shall not be admissible as evidence under any Act (ex. Wealth-tax Act, Central Excise Act, Companies Act etc.).
However, declarant will have no immunity under Criminal Acts mentioned in section 199-O of the Scheme. Non declaration of undisclosed cash or deposit in accounts under this Scheme will render tax, surcharge and cess totalling 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.