Unaccounted deposits to face 50 per cent tax

New Delhi: It is learnt that the Centre is considering reviving the income disclosure scheme for black money deposited in banks under the demonetisation of '500 and '1,000 currency notes to give a last chance to people having unaccounted funds to come clean.

Sources said that the Union Cabinet had on Thursday discussed amendments to the Income-Tax Act. One of the proposals was that people with unaccounted money can declare it and get an amnesty after paying 50 per cent tax. Half of the -amount left after paying taxes (or 25 per cent of the total sum declared) will be locked in for four years, and will not earn any interest. The rest (other 25 per cent) will be immediately given back.

The money raised through this tax could be used for the development of infrastructure.

Those with unaccounted money who choose not to come clean by paying taxes will have to pay 90 per cent tax and  penalty. “If the income-tax authorities come to know that a person has deposited unaccounted money in banks and has not declared it under the proposed scheme, he will have to pay 90 per cent tax and penalty,” a source said.

The government may bring this amendment in the current session of Parliament after getting the President’s approval, the source added.

People who are struggling with unaccounted funds after the demonetisation will therefore have the option to come clean under the proposed scheme.

The tax authorities had earlier talked of levying a peak rate of 30 per cent tax and 200 per cent penalty on those who deposit unaccounted money above 'fc2.5 lakhs in the banks after demonetisation between November 9 and December 30. However, it was felt such a move may not have legal backing. The government therefore decided to bring amendments to the I-T Act to plug loopholes for the money deposited between November 9 and December 30.

Under the Income Disclosure Scheme (IDS), that closed on September 30, a tax and penalty of 45 per cent was imposed. Since the black money holder did not utilise the government’s offer to declare his ill-gotten wealth, he  should now pay a higher rate of tax, with curbs placed on the use of that money.

The tax authorities had earlier talked of levying a peak rate of 30 per cent tax and 200 per cent penalty on those who deposit unaccounted money above 'fc2.5 lakhs in the banks after demonetisation between November 9 and December 30.

However, it was felt such a move may not have legal backing. The government therefore decided to bring amendments to the I-T Act to plug loopholes for the money deposited between November 9 and December 30.

Under the Income Disclosure Scheme (IDS), that closed on September 30, a tax and penalty of 45 per cent was imposed. Since the black money holder did not utilise the government’s offer to declare his ill-gotten wealth, he  should now pay a higher rate of tax, with curbs placed on the use of that money.