IT (Amendment) Bill passed by LS:
The Taxation Laws (2nd Amendment) Bill 2016 was passed in the lower House of Parliament without any debate.
Lok Sabha will entail a tax of 30 per cent of the income declared, an additional surcharge of 33 per cent of the tax amount, and a penalty of 10 per cent of the declared income. This adds up to a total liability of about 50 per cent.
In addition, the amendment states that 25 per cent of the declared income is to be deposited in an interest-free deposit scheme with a lock-in of four years. The funds will be invested in Pradhan Mantri Garib Kalyan Yojana to be used for benefit of poor.
If undeclared, then the unexplained amount will face a flat tax of 60 per cent, a surcharge of 25 per cent of the tax amount, and a possible 10 per cent penalty at the discretion of the assessing officer. This takes the total levy on undeclared income or assets to as much as 85 per cent.
Evaluation of earlier Voluntary Income Disclosure Scheme:
1. Essentially an extension of the recent Income Disclosure Scheme that cleaned up about Rs.65,000 crore of undeclared income by levying 45 per cent tax, the December 30 deadline for bank deposits in demonetised notes gives a more purposeful push to the effort to clean out all the cash in the grey economy.
2. The scheme for disclosing foreign assets last year had yielded just about Rs.2,400 crore in taxes.