Over time,
governments have offered reprieves to the public in the matter of tax evasion
based on the rationale that people must be given an opportunity to correct
their mistakes and contribute to nation-building.
Tax amnesty is a limited-time opportunity for a specified
group of taxpayers to pay a defined amount, in exchange for forgiveness of a
tax liability (including interest and penalties) relating to a previous tax
period or periods and without fear of criminal prosecution. In India, tax
amnesty schemes started soon after the independence. In 1951, first voluntary
disclosure schemes were announced which paved way for the declaration of
unaccounted funds without the fear of prosecution from tax laws. It was named
as VDIS Tyagi Scheme.
[1] VDIS Tyagi Scheme
1951
In India, tax amnesty schemes started soon after the
independence. In 1951, first voluntary disclosure schemes were announced which paved
way for the declaration of unaccounted funds without the fear of prosecution
from tax laws. It was named as the declaration of unaccounted funds without the
fear of prosecution from tax laws. It was named as VDIS Tyagi Scheme.
It allowed
assessees (taxpayers) to bring forward unaccounted cash before August 31, 1951,
after intimating the Income Tax Officer and paying tax on it. Citizens were
assured that they would be protected from penalties or prosecution. As a result
of the scheme, Rs. 70.20 crore were disclosed and Rs. 20 crore collected in
taxes, but the move was not considered a success, with citizens unsure about
assurances of immunity from penalties and prosecution
Focus on tax arrears. Then Minister of State, Mahavir Tyagi
for the first time gave immunity to those paying up taxes.
[2] VDIS
“Sixty-Forty” Scheme 1965
In 1965, the government launched four amnesty schemes as it
faced shortage of money due to Chinese invasion. The second scheme, "Sixty-Forty",
entailed a deposit of 60 per cent of the sum declared as tax.
The
‘Sixty-Forty Scheme’, as it was called, allowed citizens to disclose
unaccounted incomes by paying tax at the rate of 60 percent and retaining 40
percent, with immunity from penalty and prosecution. Citizens were assured that
disclosures would remain confidential and even courts were prohibited from
compelling producing these declarations in any proceedings. Tax was permitted
to be paid in two instalments. The black money and taxes collected in this
scheme were only Rs. 52.18 crore and Rs. 30.08 crore, respectively, as the tax
rate of 60 percent was regarded as too high by the tax evaders.
[3] The Block
Voluntary Disclosure Scheme 1965
It was more successful as the sum declared was treated as a
block separate from income declared in normal course. The
limited revenue resulting from the previous scheme led the Government of the
day to announce another, slightly modified scheme, allowing tax evaders to
disclose unaccounted income pertaining to any year up to March 31, 1966. This
scheme was popular because tax was payable on such disclosed income of various
years taken as a single block, at the rates applicable for the year 1965-66, and
not a flat rate of 60 percent. The tax could be paid in instalments extending
over four years. It succeeded in bringing out black money to the tune of Rs.
145 crore but the tax collection was very low, Rs.19.45 crore, as most
disclosures were made in the names of spouses, children, etc., who were in the
lowest slabs. The Wanchoo Committee estimated tax-evaded incomes in 1965 to be
around Rs. 1,000 crore.
[4] Voluntary Disclosure Scheme 1975
This scheme
was announced in the wake of the Emergency and allowed tax evaders to declare
unaccounted income or wealth of any previous year without fear of levy of
interest, penalty, or prosecution. Marginal
tax rate brought down from 97.75 per cent to 77 per cent. Slab rates prescribed
based on quantum of disclosure. On undisclosed income of up to Rs. 25,000, tax
levied at 25 per cent; Between Rs. 25,000 and Rs. 50,000, it was 40 per cent; and above Rs. 50,000, it was pegged at 60 per
cent. In addition, 2.5 per cent of sum declared had to be invested in
government notified assets.
The resultant
unaccounted income, unaccounted wealth, and Disclosure were Rs. 744 crore and
tax clloected were Rs. 241 crore. In 1975, black money was estimated to be
15-18 percent of the GDP: approximately Rs. 9,958 to Rs. 11,870 crore.
[5]
Amnesty Circulars, 1985
Undeterred by
the failure of successive schemes, the Government came up with another one in
1985, this time by stealth. This was not even called a Disclosure Scheme and
was not made with Parliamentary approval either. It came in the form of seven
CBDT circulars issued from 4 June 26, 1985 to February 17, 1986. These allowed
tax evaders to disclose their unaccounted incomes and wealth of any year before
March 31, 1986 and pay the tax due on it, on the assurance that penal interest
would be waived and immunity from penalties would be granted. There was no
immunity in respect of excise duty, sales tax, etc. The scheme was extended up
to March 31, 1987, and mopped up black money worth about Rs. 700 crore. Though figures for the period 1985
to 1987, are not available, the black money was estimated, by NIPFP, at 20% of
the GDP or Rs. 1,00,000 crore.
[6] Remittances in
Foreign Exchange (Immunities) Scheme 1991
Remittances to India are money transfers from non-resident Indians
(NRIs) employed outside the country to family, friends or relatives residing in
India. India is the world's leading receiver of remittances, claiming more than
12% of the world's remittances in 2015.
The foreign exchange immunity scheme launched by Finance Minister,
Manmohan Singh in September 1991. The scheme was aimed at attracting back the
illegal foreign currency stashed abroad by resident Indians.
The Remittances of Foreign Exchange and Investment in
Foreign Exchange Bond (Immunities & Exemption) Act, 1991 saw about Rs. 2,200
crore of income being declared, with zero taxes payable.
[7] Voluntary
Disclosure of Income Scheme, 1997
The VDIS-1997
was described as “a golden chance for tax evaders to become honest” and the
“last chance to come clean”. The scheme allowed evaders, including
non-residents, to disclose unaccounted cash, securities or assets, whether in
India or abroad, irrespective of the year, or nature, or source of the funds.
The reprieve offered was waiver of interest and penalty and immunity from
prosecution under laws of income tax, wealth tax, foreign exchange and
companies. It was also stated that the particulars supplied by a declarant were
to be kept secret. VDIS attracted 475,477 declarations aggregating to Rs.
33,697 crore and a tax realisation of Rs. 9,729 crore. The disclosure resulting
from it was only 0.79 percent of the GDP. The black money in 1995-96 was
estimated at 40% of the GDP or Rs. 4,00,000 crore.
INTRODUCTION
The Voluntary Disclosure of Income Scheme, 1997 shall come
into force from the 1st day of July, 1997. Notification to this effect has been
issued on 9th June, 1997. Any person can, therefore, make a disclosure of
income on or after this date. The last date for making the disclosure of income
is the 31st day of December, 1997.
FORM OF DECLARATION
The declaration shall be made to the Commissioner of
Income-tax and shall be in the prescribed Form.
RATE OF TAX
The tax payable on the disclosed income in respect of any assessment
year shall be at the rate of 35% in the case of companies and firms and 30% in
the case of others.
The tax payable under the Scheme is required to be paid
before the filing of the declaration. The declaration should be accompanied by
the proof of payment of tax. In case a person is not in a position to pay the tax
before the filing of the declaration, he may do so within 3 months of the date
of filing of the declaration. In such a case simple interest @ 2% shall be
charged for every month or part of a month comprised in the period beginning
from the date of filing of the declaration to the date of payment of the tax.
Voluntary Disclosure of income — Certificate granted by Commissioner
under Voluntary Disclosure of Income Scheme is binding on assessing officer
hence additions cannot be made [Finance Act, 1997]
Dismissing the appeal of the Revenue, the Court held that;
The Commissioner having issued the certificate upon the declaration made under
the Voluntary Disclosure of Income Scheme under section 68(2) of the Finance Act, 1997, judicial discipline
requires that the authorities entrusted with administering law proceed on the
basis that the certificate granted by the Commissioner would indicate
satisfaction of all the requisite conditions as required by the provisions of
the Scheme and it is not open to the subordinate authority to sit in judgment
over the certificate granted by the Commissioner. It is not open to the Assessing
Officer to go behind the certificate issued by the Commissioner and ignoring
it, assess an income which has already borne tax under the Scheme. [BP.
03.11.1996 to 20.10.1997]
[CIT v. Rajiv Enterprise (2017) 396 ITR 364 (Guj)]
[8] Kar Vivad
Samadhan Scheme, 1998
The Scheme is applicable to tax arrears determined on or
before 31.03.1998 but remaining unpaid on the date of declaration under various
direct tax enactments. The amount payable by the declarants shall be determined
as under:—
(i) The declarant
shall be required to pay tax at 30% (35% in the case of firms and companies) on
the amount of income in dispute (in other than search and seizure cases).
(ii) Where tax
arrears include income-tax, interest payable or penalty levied, the amount
payable shall be 30% of the disputed income (35% in the case of firms and
companies).
(iii) Where tax
arrears comprise only interest payable or penalty levied, the amount payable
shall be 50% of the tax arrear.
(iv) Where tax
arrears include the tax, interest or penalty determined in any assessment on
the basis of search and seizure proceedings under section 132 or section 132A
of the Income-tax Act, the amount payable shall be 40% of the disputed income
(45% in the case of firms and companies).
(v) In respect of arrears under the Wealth-tax
Act, the amount payable shall be 1% of disputed wealth where the tax arrears include
wealth-tax or interest and penalty levied in addition to wealth-tax. Where tax
arrear is only interest payable or penalty levied, 50% of such amount is to be
paid. Where the tax arrears are determined on the basis of search and seizure proceedings
under section 37A or 37B of the Wealth-tax Act, the tax payable shall be @ 2%
of the disputed wealth.
(vi) In respect of tax arrears payable
under the Gift-tax Act, the amount payable shall be 30% of the disputed value
of the gift where the tax arrears include gift-tax or interest payable and penalty
levied in addition to gift-tax. Where tax arrear is only interest payable or
penalty levied, 50% of such amount shall be paid.
(vii) In respect of tax arrears payable
under the Expenditure-tax Act, the amount payable shall be 10% of the disputed chargeable
expenditure where the tax arrear comprises expenditure-tax or includes interest
payable and penalty in addition to expenditure-tax. Where the arrear is only in
respect of interest or penalty, only 50% of the arrear shall be payable.
(viii) In respect of tax arrears payable under the
Interest-tax Act, the amount payable shall be @ 2% of the disputed chargeable interest
where tax arrear includes interest tax or interest payable and penalty levied
in addition to interest tax. If the tax arrears include only interest or
penalty, the amount payable will be 50% of the tax arrear.
Scheme shall not apply in the following cases
(i) in a case where prosecution for concealment
has been launched under any direct tax enactment or where a person has been
convicted for such offence;
(ii) in a case where no appeal or reference or
writ petition is admitted and pending before any appellate authority or the High
Court or the Supreme Court or no revision application is pending before the
Commissioner;
(iii) in a case where order has been passed by the
Settlement Commission under section 245D(4) of the Income-tax Act or under
sub-section (4) of section 22D of the Wealth-tax Act;
(iv) in respect of a person against
whom prosecution for any offence punishable under Chapter IX or XVII of the
Indian Penal Code, the Foreign Exchange Regulations Act, the Narcotic Drugs and
Psychotropic Substances Act, the Terrorist and Disruptive Activities
(Prevention) Act, the Prevention of Corruption Act or for the purpose of enforcement
of any civil liability has been instituted or the person has been convicted of
any such offence;
(v) in respect of a person against whom an order
of detention has been issued under the COFEPOSA Act;
(vi) in respect of a
person who has been notified under the Specified Court (Trial of Offences
relating to Transactions in Securities) Act, 1992.
Time and manner of payment of tax arrears
Within sixty days from the date of receipts of declaration,
the designated authority shall, by order, determine the amount payable by the
declarant in accordance with the provisions of scheme and grant certificate of
tax arrears and sum payable after such determination towards full and final
settlement of tax arrears. The declarant shall pay sum determined by the designated
authority within thirty days of the passing of an order by designated
authority.
Appellate Authority not to proceed in certain cases
Relating to disputed chargeable expenditure, disputed chargeable interest, disputed income, disputed wealth, disputed
value of gift or tax arrears specified in section. In case appeal is filed by
the department of Central Government in respect of issue relating to same issue
except where tax arrears comprise only penalty, fines or interest)
No refund of amount paid under the Scheme
Any amount paid in pursuance of a declaration
made under section 88 shall not be refundable under any circumstances.
Immunity from prosecution and imposition of penalty in
certain cases
Grant immunity from instituting prosecution for any offence
under any direct tax enactment, or indirect tax enactments, or from the imposition
of penalty under any of such enactment, in respect of matters covered in the
declaration under section 88.
[9] Undisclosed
Income Under Income Disclosure Scheme, 2016 [IDS 2016]
Income declaration scheme, 2016 was an amnesty scheme introduced
by Government of India as a part of the 2016 Union budget to unearth black
money and bring it back into the system. Lasting from 01.06.2016 to 30.09.2016,
the scheme provided an opportunity to income-tax and wealth-tax defaulters to
avoid litigation and become compliant by declaring their assets, paying the tax
on them and a penalty of 45% thereafter. Under IDS 2016, 71,726 declarations
were made of income amounting to Rs. 67,382 crore and approximately.
The scheme guaranteed immunity from prosecution under the Income
Tax Act, Wealth Tax Act, 1957, and the Benami Transactions (Prohibition) Act,
1988 and also ensured that declarations under it would not be subjected to any
scrutinies or inquiries.
What can be declared under IDS?
The scheme shall apply to undisclosed income whether in the
form of investment in assets or otherwise, pertaining to Financial Year 2015-16
or previous years.
v
However, foreign assets or income to which the
Black Money Act, 2015 applies are not eligible for
declaration under this scheme.
v If one has failed to furnish Income Tax Return of previous years under section 139 of the Income-tax Act, such income can
now be declared under this new scheme. (In case if you have received any
notices under section 142(1) or 143(2) or 148 or 153A or 153C, your case may
not be eligible for this scheme).
Undisclosed Income
1. Bullion, jewellery or precious stone
2. Archaeological collections
3. Drawings, paintings, sculptures or any work of art
4. Shares & securities (quoted & unquoted)
5. Immovable property
6. Interest in a partnership firm
7. Any other asset such as:—
(i) Undisclosed Bank
Accounts
(ii) Fixed Deposit
(iii) Deposit in Cooperative Bank
(iv) Investment in Credit Co-operative Societies
(v) Unaccounted
transactions with financial institutions etc.
Relating
to any financial year up to 2015-16
Who can make a Declaration?
All “Persons” such as
1. Individuals
2. HUFs
3. Companies
4. Firms
5. Association of Persons
Scheme at Glance
|
Commencement of Scheme
|
From 01.06.2016
|
|
Last date for making a declaration
|
Last date for making a declaration
30.09.2016
|
|
Last date for making payment of Tax,
Surcharge & Penalty
|
30.09.2017
|
Declaration Forms
|
Form 1
|
Declaration form (to be filed by
declarant by 30.09.2016)
|
|
Form 2
|
Acknowledgment of declaration (to be
issued by PCIT/CIT within 15 days from the end of the month in which
declaration is filed)
|
|
Form 3
|
Intimation of payment of tax,
surcharge & penalty (to be furnished by declarant to PCIT/CIT by
30.11.2016).
|
|
Form 4
|
Certificate of declaration (to be
granted by PCIT/CIT within 15 days from the date of intimation of payment).
|
Amounts payable by declarant
(a)
Tax @ 30% of undisclosed income
(b)
Surcharge @ 7.5% of undisclosed income
(c)
Penalty @ 7.5% of undisclosed income
Total 45% of undisclosed income declared scheme
Time schedule for making payments under Income Declaration Scheme
Time schedule for making payments under the Scheme as
under:—
(i) a minimum
amount of 25% of the tax, surcharge and penalty to be paid by 30.11.2016;
(ii) a further amount
of 25% of the tax, surcharge and penalty to
be paid by 31.3.2017; and
(iii) the balance amount to be paid on or before 30.09.2017.
Tax in respect of voluntarily disclosed income not
refundable [Section 191]
Any amount of tax and surcharge paid under section 184 or
penalty paid under section 185 in pursuance of a declaration made under section
183 shall not be refundable.
Benefits of Declaration
(i) No Wealth Tax
on assets declared
(ii) No scrutiny or
enquiry under Income-tax Act and Wealth Tax Act in respect of declaration
(iii) Immunity from
prosecution under Income Tax Act and Wealth Tax Act in respect of declaration
(iv) Immunity from Benami Transactions (Prohibition)
Act, subject to transfer of assets by the benamidar to the real owner before
30.09.2017
(v) Undisclosed income declared not to be
included in total income [Section 188] The amount of undisclosed income
declared in accordance with section 183 shall not be included in the total
income of the declarant for any assessment year under the Income-tax Act, if
the declarant makes the payment of tax
and surcharge referred to in section 184 and the penalty referred to in section
185, by the date specified under subsection (1) of section 187.
Undisclosed income declared not to affect finality of
completed assessments [Section 189]
A declarant under this Scheme shall not be entitled, in
respect of undisclosed income declared or any amount of tax and surcharge paid thereon,
to re-open any assessment or reassessment made under the
Income-tax Act or the Wealth-tax Act, 1957 (27 of 1957), or
claim any set off or relief in any appeal, reference or other proceeding in
relation to any such assessment or reassessment.
Undisclosed income declared not to be treated as benami transaction
in certain cases [Section 190]
The provisions of the Benami Transactions (Prohibition) Act,
1988 (45 of 1988) shall not apply in respect of the declaration of undisclosed income
made in the form of investment in any asset, if the asset existing in the name
of a benamidar is transferred to the declarant, being the person who provides
the consideration for such asset, or his legal representative, within the
period notified by the Central Government.
Declaration not admissible in evidence against declarant
[Section 192]
Notwithstanding anything contained in any other law for the
time being in force, nothing contained in any declaration made under section 183
shall be admissible in evidence against the declarant for the purpose of any
proceeding relating to imposition of penalty, other than the penalty leviable
under section 185, or for the purposes of prosecution under the Income-tax Act
or the Wealth-tax Act, 1957 (27 of 1957).
Exemption from wealth-tax in respect of assets specified in declaration
[Section 194]
(1) Where the undisclosed income is
represented by cash (including bank deposits), bullion, investment in shares or
any other assets specified in the declaration made under section 183—
(a) in respect of which the declarant has failed
to furnish a return under section 14 of the Wealth-tax Act, 1957 (27 of 1957),
for the assessment year commencing on or before the 1st day of April, 2015; or
(b) which have not been shown in the return of net
wealth furnished by him for the said assessment year or years; or
(c) which have been understated in
value in the return of net wealth furnished by him for the said assessment year
or years, then, notwithstanding anything contained in the Wealth-tax Act, 1957 (27
of 1957), or any rules made thereunder,—
(i) wealth-tax shall
not be payable by the declarant in respect of the assets referred to in clause
(a) or clause (b) and such assets shall not be included in his net wealth for
the said assessment year or years;
(ii) the amount by which the value of
the assets referred to in clause (c) has been understated in the return of net
wealth for the said assessment year or years, to the extent such amount does
not exceed the voluntarily disclosed income utilised for acquiring such assets,
shall not be taken into account in computing the net wealth of the declarant
for the said assessment year or years.
Explanation : Where a
declaration under section 183 is made by a firm, the assets referred to in sub-clause
(i) or, as the case may be, the amount referred to in sub-clause (ii) shall not
be taken into account in computing the net wealth of any partner of the firm
or, as the case may be, in determining the value of the interest of any partner
in the firm.
(2) The provisions of sub-section (1)
shall not apply unless the conditions specified in sub-sections (1) and (2) of
section 187 are fulfilled by the declarant.
Non-Applicability
(i)
Notice has been issued under section
142(1)/143(2)/ 148/153A/153C of IT Act (debarred only for AY for which notice
is issued)
(ii)
Search/Survey have been conducted
(iii)
Income sought to be declared is
chargeable under the Black Money Act, 2015
(iv) COFEPOSA detainees, persons notified under Special Courts Act,
1992, cases of prosecution under NDPS Act, Prevention of Corruption Act, and
certain offences under Indian Penal Code
Normal tax paid cannot be adjusted against tax on Income Disclosed under
IDS - 2016
Advance tax, self assessed tax and TDS paid prior to filing of
declaration, should not be adjusted towards discharge of assessee’s liability
to pay tax, surcharge and penalty under the scheme of Income Tax Declaration
Scheme, 2016 in absence of any specific provision in the scheme, granting
benefit of the self assessed tax or advance tax under the Act. (Related
Assessment Years : 2011-12, 2012-13)
[Umesh D. Ganore v. PCIT - Date of Judgement : 08.03.2019 (Bom)]
Power to remove difficulties- Not depositing the
first instalment with in time – Board refusing to condonation of delay -
Concession and excess indulgence would demotivating effect on honest taxpayers
making regular and prompt tax deposit - Dismissal of application is held to be
justified
Petitioner challenged the order of the CBDT to condone the delay in paying
first instalment of the tax payable under IDS 2016 . Dismissing the
petition the Court held that the view expressed by the CBDT stating that,
concession and excess indulgence would demotivating effect on honest
taxpayers making regular and prompt tax deposit . Accordingly dismissal of
application is held to be justified. (WP N0. 14395 of 2018 dated 29.01.2019)
[Sadhana R. Jain v. CBDT (2019) 307 CTR 207 : 174
DTR 385 (Bom)]
[10] Direct Tax
Dispute Resolution Scheme 2016
This scheme is aimed at accomplishing two-fold objectives: reduction
of huge backlog of cases and realization of dues expeditiously for the
Government.
Introduction
The Direct Tax Dispute Resolution Scheme (‘the Scheme’) has
been introduced as a part of the Finance Act, 2016 providing an opportunity to
taxpayers to settle their pending tax disputes. The scheme is incorporated as
Chapter X of the Finance Act, 2016 comprising of sections 200 to 211.
When to make declaration
The scheme is in force from 1st June, 2016 and will end on
31st December, 2016. Thus, declarant has time till 31st January,
2017 to settle his pending litigation.
Who can make declaration
Every person i.e. individual, HUF, company, firm, etc.,
irrespective of his residential status can settle his tax dispute under this
scheme in respect of tax arrears and specified tax.
Tax Arrear
Amount of tax, interest or penalty determined under the
Income Tax Act, 1961 (‘IT Act’) or Wealth Tax Act, 1957 (‘WT Act’), in respect
of which appeal is pending before the CIT(A) or CWT(A) as on 29th February,
2016.
Specified Tax
Tax determined in consequence of or is validated by an
amendment made with retrospective effect in Income Tax Act or Wealth Tax Act,
for a period prior to the date of enactment of such amendment and a dispute in respect
of which is pending as on 29th February, 2016.
Under the Scheme
If the amount of disputed tax is
(a)
Upto Rs. 10 lakh, complete waiver from levy of
penalty and from initiation of prosecution is provided
on payment of assessed tax along with the interest.
(b)
More than Rs. 10 lakh, the declarant is required
to pay only 25% of the minimum penalty leviable along
with the due tax and interest.
The scheme is applicable to “tax arrear”
Which is defined as the amount of tax, interest or penalty determined
under the Income-tax Act or the Wealth-tax Act, 1957 in respect of which appeal
is pending before the Commissioner of Incometax (Appeals) or the Commissioner
of Wealth-tax (Appeals) as on the 29th day of February, 2016.
Who cannot make a declaration
The scheme shall not be applicable in case where prosecution
has been initiated before 29.02.2016.
(i)
Search or survey cases where the declaration is
in respect of tax arrears.
(ii)
Cases relating to undisclosed foreign income and
assets.
(iii) Cases based on information received under Double Taxation Avoidance Agreement under section 90 or 90A of the
Income-tax Act where the declaration is in respect of tax arrears.
(iv)
Person notified under Special Courts Act, 1992.
(v)
Cases covered under Narcotic Drugs and
Psychotropic Substances Act, Indian Penal Code,
Prevention of Corruption Act or Conservation of Foreign Exchange and Prevention
of Smuggling Activities Act, 1974.
How to apply under this scheme
Make an application before the Designated Authority (DA)
being Principal Commissioner of Income Tax (PCIT)/Commissioner of Income Tax
(CIT).
No refund of taxes paid under the scheme
Any amount paid in pursuance of declaration shall not be refundable.
[11] Taxation and
Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY 2016)
The PMGKY was
an amnesty scheme announced in November 2016 for the period running up to 10.05.2017. This scheme was for people who had not taken
advantage of the previously concluded IDS and who continued to hold
unaccounted-for money or had deposited it in their bank accounts after
demonetisation.
The PMGKY scheme,
which ended on 10.05.2017,
saw income amounting to Rs. 4,900 crore
being declared by 21,000 people with tax and penalty collections totalling Rs.
2,451 crore. This was much lower than the earlier four-month long tax
compliance window of the IDS.
Name of the scheme
This scheme may be called the PRADHAN MANTRI GARIB KALYAN YOJANA,
2016. Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana,
2016 (PMGKY 2016) has commenced since 17.12.2016 and last date for declarations
under the Scheme has been extended upto 10.05.2017.
Declarations not eligible for the scheme in certain cases
The provisions of the scheme shall not be applicable in the
following cases:—
(i)
Declarations in relation to any person in
respect of whom an order of detention has been made under
the Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act, 1974 subject to the conditions
specified under the Scheme.
(ii)
Declarations in
relation to prosecution for any offence punishable under Chapter IX or Chapter
XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances
Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of
Corruption Act, 1988, the Prohibition of Benami Property Transactions Act, 1988
and the Prevention of Money- Laundering Act, 2002;
(iii)
If the declarant is a person notified under
section 3 of the Special Court (Trial of Offences
Relating to Transactions in Securities) Act, 1992;
(iv)
Declarations in relation to any undisclosed
foreign income and asset which is chargeable to tax under
the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act,
2015.
Tax rate to be paid
The exact is 49.9 percent, the breakup for which is as
follows: Undisclosed income in the form
of cash & bank deposit can be declared:
A. Tax, Surcharge, Penalty payable:
(i) Tax @ 30% of
income declared
(ii) Pradhan Mantri
Garib Kalyan Cess @33% of tax
(iii) Penalty @10%
of income declared
(B) Pradhan Mantri
Garib Kalyan Deposit Scheme, 2016
25% of declared income to be deposited in interest free
Deposit Scheme for four years. This amount is proposed to be utilised for the schemes
of irrigation, housing, toilets, infrastructure, primary education, primary health,
livelihood, etc.
EXAMPLE
For Undisclosed income of Rs. 10,00,000
v
Tax @ 30% of the undisclosed income, Tax will be
Rs. 3,00,000
v
Penalty @ 10% of the undisclosed income, penalty
will be Rs. 1,00,000
v
Surcharge @ 33% of tax i.e 33% of Rs. 3,00,000
will be Rs. 99,000
Total tax & penalty payable:
Rs 4,99,000
And above that 25% of undisclosed income in a Deposit Scheme
i.e Rs 2,50,000 will be locked in for 4 years without accruing any interest.
Requirement of deposit of 25 percent of undisclosed income
After paying tax as specified above, the person shall also
have to deposit 25 percent of the undisclosed income in the Pradhan Mantri Garib
Kalyan Deposit Scheme, 2016 with a lock-in period of four years.
Along with the above-said tax, penalty, and cess, the
declarant will 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’.
This amount is proposed to be utilized for the schemes of irrigation, housing,
toilets, infrastructure, primary education, primary health, livelihood, etc.,
so that there is justice and equality. This is a FREE deposit scheme of four
years. The withdrawal of amount shall be after four years and will be subject
to some conditions as may be specified.
No interest on deposit
The 25 percent deposited shall not carry interest.
Eligibility for Deposits
The deposit under this Scheme shall be made by any person
who intends to declare undisclosed income under sub-section (1) of section 199C
of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana,
2016.
Form of the deposits
(1) The deposits
shall be held at the credit of the declarant in Bonds Ledger Account maintained
with Reserve Bank of India.
(2) A certificate of
holding the deposit shall be issued to declarant in Form I.
(3) The Reserve Bank of India shall
transfer the deposit received under this Scheme into the designated Reserve
Fund in the Public account of the Government of India.
Subscription and Mode of investment in the Bonds Ledger Account
(i) The deposits shall be accepted at
all the authorised banks notified by Government of India.
(ii) The deposits shall be made in multiples of rupees one hundred.
(iii) The deposit under sub-section (1)
of section 199F by a declarant shall not be less than twenty-five per cent. of
the undisclosed income to be declared under sub-section (1) of section 199C of
the Act.
(iv) The entire deposit to be made
under sub-section (1) of section 199F under this Scheme shall be made, in a
single payment, before filing declaration under sub-section (1) of section
199C.
(v) The deposit shall be made in the
form of cash or draft or cheque or by electronic transfer and shall be drawn in
favour of the authorised bank accepting such deposit.
Effective date of deposit
The effective date of opening of the Bonds Ledger Account
shall be the date of tender of cash or the date of realisation of draft or
cheque or transfer through electronic transfer.
Applications
(1) An application for the deposit
under this Scheme shall be made in Form II clearly indicating the amount, full
name, Permanent Account Number (hereinafter referred to as ‘PAN’), Bank Account
details (for receiving redemption proceeds), and address of the declarant:
Provided that if the declarant does not hold a PAN, he shall apply for a PAN
and provide the details of such PAN application along with acknowledgement number.
(2) The application under sub-paragraph
(1) shall be accompanied by an amount which shall not be less than twenty-five
per cent. of the undisclosed income to be declared in the form of cash or draft
or cheque or through electronic transfer as provided under sub-paragraphs (3)
and (4) of paragraph 4.
Nomination
(1) A sole holder or a sole surviving holder of a
Bonds Ledger Account, being an individual, may nominate in Form III, one or
more persons who shall be entitled to the Bonds Ledger Account and the payment
thereon in the event of his death.
(2) Where any amount is payable to two or more
nominees and either or any of them dies before such payment becomes due, the
title to the Bonds Ledger Account shall vest in the surviving nominee or nominees
and the amount being due thereon shall be paid accordingly. In the event of the
nominee or nominees predeceasing the holder, the holder may make a fresh
nomination.
(3) A nomination made
by a holder of Bonds Ledger Account may be varied by a fresh nomination, or may
be cancelled by giving notice in writing to the Authorised Bank in Form IV.
(4) Every nomination
and every cancellation or variation shall be registered at the Reserve Bank of
India through the authorised bank and shall be effective from the date of such
registration.
(5) If the nominee is
a minor, the holder of Bonds Ledger Account may appoint any person to receive
the Bonds Ledger Account or the amount due in the event of his death.
Transferability
The transferability of the Bonds Ledger Account shall be
limited to nominee or to the legal heir of an individual holder, in the event
of his death.
Tradability against Bonds
The Bonds Ledger Account shall not be tradable.
Repayment
The Bonds Ledger Account shall be repayable on the
expiration of four years from the date of deposit and redemption of such Bonds Ledger
Account before its maturity date shall not be allowed.
Declaration under Pradhan Mantri Garib Kalyan
Yojana Scheme,2016 after search and seizure – Retention was held to be valid
-Court directed to release of small part of seized amount
The
assessee filed a writ petition challenging a portion of Circular No. 2 of 2017
dated January 18, 2017 (2017) 390 ITR (St.) 125) by which the Board disabled a
person from seeking adjustment of the cash seized by the Department and
deposited in the public deposit account, towards payment of tax, surcharge and
penalty under the Scheme. The Court held that, retention was held to be valid
however the Court directed to release of small part of seized
amount. The Court also observed that release would not hamper either
any investigation or further proceedings on the part of the Department.
[Jaya
Balajee Real Media (P) Ltd. v. CIT (2018) 404 ITR 124 : 303 CTR 489 : 167 DTR
465 (T&AP)]
Pradhan Mantri Garib Kalyan Yojna, 2016 – Court declined to enter
into or encroach upon policy making arena and suggest a different policy on
ground that it was not within its domain
[Constitution of India]
Challenging Section 199A of the Finance Act, 2016, Pradhan
Mantri Garib Kalyan Yojna, 2016, the petitioner urged for a different and
better scheme which could have got more good money in banks and honest taxpayers
would have deposited amount. However, Court declined to enter into or encroach
upon policy making arena and suggest a different policy on ground that it was
not within its domain court, therefore there was no justification to issue
notice in instant petition and accordingly it was dismissed.
[Siddharth Mehta v. UOI (2017) 244 Taxman 289 (SC)]
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