Income Declaration Scheme : PM Narendra Modi has vowed to eliminate the problem of black money from India from root-level. On November 8th he introduced the demonetization policy scrapping the high denomination notes of Rs 500 and Rs 1000 in a bid to remove the black money from India. Then on November 28th he introduced a new income tax declaration scheme which would further reduce the money laundering problem.
The masses were asked to disclose the income sources details by November end this year and a heavy penalty has been announced on the undisclosed income.
Income Declaration Scheme
- The scrapped old notes of Rs 500 and Rs 1000 have to be submitted to the banks before December 30 this year. The deposited amount exceeding Rs 2.5 lakhs in one account will be enquired into.
- The acquired black money will be taxed at 50%.
- Under Pradhan Mantri Garib Kalyan Yojna(PMGKY), the declarant will have to deposit 25% of the undisclosed income.
- 30% of the undisclosed income will have to be deposited as tax and penalty will be imposed at 10% as under PMGKY.
- Surcharge at 33% of the tax will be levied called Pradhan Mantri Garib Kalyan Cess.
Changes made under Income Declaration Scheme
- Penalty – On disclosing the black money amount tax will be imposed at 50% and on undisclosed black money tax will be imposed at 200%.
- For unexplained investment and credit – Tax at 60% + surcharge at 25% of tax, no deductions are allowed
- Pradhan Mantri Garib Kalyan Yojna Investment and Taxation regime – Tax will be imposed at 30% of the declared income, surcharge at 33% of tax, penalty at 10% of income declared and 25% of the declared income will ahve to be deposited in the interest free deposit scheme for a time period of four years.