Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha

Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha , In the Ongoing Winter Session Union Finance Minister ArunJaitly has introduced a bill in the LokSabha to amend the Income Tax rules levying a tax of 60 per cent on undisclosed income or unaccounted credits in the bank accounts. The amended bill introduced comes with a new ‘Pradhan Mantri Garib Kalyan Yojana, 2016’

(PMGKY) which allows people to deposit money in their accounts till April 1, 2017.

iii. Under this Scheme the declarant will be levied 50 per cent of the total amount — 30 per cent as tax, 10 per cent as penalty and 33 per cent of the taxed amount– that is 10 per cent — as Garib Kalyan Cess on the tax payable.

iv. The bill comes with additional provision that besides taxes penalty and cess which totals up to around 50%, the declarant will have to deposit 25% of undisclosed income in a deposit scheme that will be called Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The 25 % amount has to be locked up for four years in interest-free.

v. The Proposed Garib Kalyan cess will be make use of for irrigation, housing, construction of toilets, infrastructure, primary education, primary health, livelihood, etc.

vi. The amended bill text also reads that incase the undisclosed income found during search seizure cases a penalty of 30 % shall be enforced by the Income Tax Department in addition to the regular tax on the money. However the person has to provide evidence for the income that has arrived if he/ she fails to justify up to 60% penalty plus a surcharge of 25 percent of tax (15 percent), which will amount a levy of 75 percent.

vii. Besides, if the assessing officer decides he can charge a 10 percent penalty in addition to the 75 percent tax.The current provisions of penalty on under-reporting of income at 50 percent of the tax, and misreporting (200 percent of tax) will remain and no changes are being made to them