After the demonetization step of the central government, it has given another opportunity (earlier Income Declaration Scheme (IDS)) to the people to pay taxes with penalties and declare undisclosed income through the proposed Pradhan Mantri Garib Kalyan Yojana ( PMGKY).
This is a 2 in 1 step of the government.
- First it gives opportunity to people with undisclosed income to come out and declare their income,
- Second it will use part of this undeclared income for the welfare of people.
Four important things to know about the scheme:
- PMGKY will allow people to deposit the money (which they did not declared earlier or which is the untaxed money)by paying 50% of the whole amount (30% tax, 10% fine and 33% of the tax which is 10% of the whole amount) in form of Poor Welfare Cess till 1 April 2017.
- The declarant will also have to deposit 25% of undisclosed income in a deposit scheme to be notified by the RBI under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 and this 25% amount will remain locked in Pradhan Mantri Poor Welfare interest free Deposit Scheme till 4 Years.
- If the declarant refuses the option of using the government deposit scheme, 85% of the amount will be deducted as taxes and penalties.
- For money that is found in raids, taxes and penalties of nearly 90% of the amount will be levied, leaving just 10% with the owner.
Example: Say, income undisclosed is Rs 5 lakh
- Tax will be 1.5 lakh, surcharge of Rs 49,500, penalty will be Rs 50,000. Total is Rs 2,49,500 i.e. nearly 50% of undisclosed income.
- Over and above A.; Rs 1.25 lakh will be locked in for 4 years without accruing any interest.