Income Tax: Govt introduces new Bill to tax newly declared money

Finance Minister Arun Jaitley on Monday introduced bill to amend Income Tax Act in Lok Sabha.

Amid the process to curb black money in the country, Jaitley proposed an alternative scheme called, 'Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016' (PMGKY) for the Bill.

As per the proposal, under this regime, the declarant will be required to pay tax at 30% of the undisclosed income and penalty at the rate of 10% of the undisclosed income. 

Further, a surcharge to be called 'Pradhan Mantri Garib Kalyan Cess' at 33% of tax is also proposed to be levied. In addition to tax surcharge and penalty, the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the Central Government in consultation with the Reserve Bank of India under the 'Pradhan Mantri Garib Kalyan Deposit Scheme, 2016'.

"This amount is proposed to be utilised for the programmes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc.; so that there is justice and equality", the proposal said.

Giving reasons for the introduction of the Bill, Jaitley in the proposal said, "Concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 could possibly be used for concealing black money. It is, therefore, important that the Government amends the Act to plug these loopholes as early as possible so as to prevent misuse of the provisions".

The Taxation Laws (Second Amendment) Bill, 2016, proposes to make some changes in the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision, the proposal added.