Pradhan mantri garib kalyan yojana - 2016 Analysis

Now people with unaccounted wealth to come clean or face stringent penalties while inviting others to blow the whistle on those suspected to be holding black money as it launched the scheme that had been announced earlier. Now the new scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY ) , 2016, will start on December 17 and remain open until March 31 next year. Those who declare cash deposits under this will be levied a charge of 50%, which breaks down into 30% tax, 33% surcharge and 10% penalty. In addition to this, 25% of the amount declared will go into the non interest-bearing Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, for four years.

AFter the Rs 500 and Rs 1,000 notes would cease to be legal tender on November 8 a new window for black money holders after the Income Disclosure Scheme which was closed on September 30. The Declarations under PMGKY will be confidential and those taking advantage of it will escape prosecution. By this The government has given a long window for the declarations because we want people to voluntarily come forward and make their declarations and a Part of PMGKY’s proceeds will be used for the benefit of the poor. Those who don’t take advantage of the scheme and are caught later will face up to 85% penalty, besides prosecution. Not declaring undisclosed cash or deposits in banks under the scheme now but showing it as income in the tax return form would attract a total of 77.25% in taxes and penalty.

The scheme was notified after the Taxation Laws Second (Amendment) Bill, 2016, came into force on December 15. The Bill was passed by the Lok Sabha but could not be taken up in the Rajya Sabha. As per the new scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY) Only after payment of 50% tax and setting aside 25% of the remaining undisclosed amount for four years can a person avail the PMGKY scheme. 

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. 

Salient features of Scheme 

(a) 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. 

(b) 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. 

(c) 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. 

(d) 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.). 

(e) However, declarant will have no immunity under Criminal Acts mentioned in section 199-O of the Scheme. 

(f) 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. 

(g) 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. 

As per the scheme such money will that is the money or revenue generated from disclosure of unaccounted cash will be used for welfare schemes for the poor. It will be mainly used for projects in irrigation, infrastructure, primary education, primary health, housing, toilets and livelihood so that there is justice and equality.