Income Tax Penalty on Unaccounted Cash Deposit - 50% tax Penalty plus 4 year Lock-in

The government this Thursday night proposes to amend the Income Tax Act to curb the black money holders.

And, going to introduce the amendments in the parliament next week so that it will able to take the legal and penal actions against the person who have deposited unaccounted money in the accounts during the period from 9th Nov to 30th Dec 2016.

Through this proposed amendments, the government wants to punish the guilty people and for the same they do not want to give any immunity and wants to curb in a higher tax rate more than the maximum rate of tax or even more than the rate of Income Disclosure scheme.

Let’s discuss, what are the Changes in Income Tax Act proposed by the Government?

The proposed amendments to the Income-tax Act will enable the Income-tax officers, to levy a minimum of 50% tax and a 4-year lock-in of the half with zero percent instrument of the remaining of the disclosed unaccounted cash deposits.

This 50% tax rate only applies to the voluntary disclosures and those who after this do not disclose and got caught by the Income-tax officials, a higher rate of tax and a penalty of the total of 90% would be levied.

What type of instrument will be given by the government instead of the Locked amount?

The government is thinking of issuing a bond where all the locked 25% unaccounted cash money will be parked for four years bearing a zero percent coupon.

This step is taken after seeing a surge in the deposits of Rs. 21,000 crores in the Jan Dhan accounts and people are using those accounts for converting their black money into white and to take a strict action against these situation Government has stopped the swapping of the old currency with new notes over the bank counters from 24th November.

Conclusion

The government is thinking of this move will help them to tax those persons who do not disclose their Income in Income disclosure scheme in Sep’16, but the result of the same can be seen after this 50 day swapping and deposition window ends.

In case you have any doubt or query, you can post it in our CONTACT FORM.