How much it cost to convert black into white?
How much I have
to pay to government to convert my undisclosed money (Black money) into white
money?
Features of the Scheme states as under :
·
Declaration under the Scheme can be made by any
person in respect of undisclosed income in the form of cash or deposits in an
account with bank or post office or specified entity.
·
Tax @30% of the undisclosed income, surcharge @33%
of tax and penalty @10% of such income is payable besides mandatory deposit of
25% of the undisclosed income in Pradhan Mantri Garib Kalyan Deposit Scheme,
2016. The deposits are interest free and have a lock-in period of four years.
·
The income declared under the Scheme shall not be
included in the total income of the declarant under the Income-tax Act for any
assessment year.
·
The declarations made under the Scheme shall not be
admissible as evidence under any Act (eg. Central Excise Act, Wealth-tax Act,
Companies Act etc.). However, no immunity will be available under Criminal Acts
mentioned in section 199-O of the Scheme.
Analysis of tax Amount to be paid
As Disclosed in
the schema
Tax @30% of the
undisclosed income, surcharge @33% of tax and penalty @10% of such income is
payable
Effective Tax rate
Tax
|
30.00
|
Surcharge
|
9.90
|
Penalty
|
10.00
|
Total (Effective tax rate)
|
49.90
|
However person opts
the schema has to mandatory deposit 25% of the undisclosed income in Pradhan
Mantri Garib Kalyan Deposit Scheme, 2016.
The deposits are interest free and have a lock-in
period of four years.
The above phrase contains the hidden cost,
Let us explain by an example
Suppose I have 100 Rs black money which I am disclosing
under the schema which will lead me to deposit Rs. 49.9 in the government
account
In addition I have to deposit 25 % of my undisclosed income
under the in Pradhan Mantri Garib Kalyan Deposit Scheme 2016; same are interest free and have a lock-in period of four years. That
means I have to deposit Rs. 25 under this schema on which I will not able to
generate any income for four years.
Value of my 25 Rs after four year will decline and lead’s to
addition cost to me and addition revenue to government of Rs. 7.92 ( Click here to know how )
That means schema will cost me Rs 57.82 for my 100 Rs
disclosure.
So considering the financial
impact, it must say effective tax rate
for the declarant is 57.82 percent.
For Non-Declarant
For Non
declaration of undisclosed cash or deposit in accounts under
the Scheme will render such undisclosed
income liable to tax, surcharge and cess totaling to 77.25% of such income,
if declared in the return of income. In case the same is not shown in the
return of income a further penalty @10%
of tax shall also be levied followed
by prosecution.
It may be noted that the provisions for levy of penalty for misreporting of
income @200% of tax payable under
section 270A of the Income-tax Act have not been amended and shall continue to apply with respect to
cases falling under the said section.
The Taxation Laws (Second Amendment) Act, 2016 has
also amended the penalty provisions in respect of search and seizure cases. The
existing slab for penalty of 10%, 20% & 60% of income levied under section
271AAB has been rationalised to 30% of income, if the income is admitted and
taxes are paid. Otherwise a penalty @60% of income shall be levied.
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