New Delhi, Nov 26: Black money hoarders across the nation are in a state of fix and are left with no option but to deposit their unaccounted wealth in their bank accounts. These hoarders are likely to face an extraordinary taxation regime as a minimum of 50 per cent tax may be levied on unexplained bank deposits made using the banned currency notes up to December 30 and a 4-year lock-in for half of the remaining amount of unaccounted or suspicious deposits. However, as per reports, a higher 90 per cent tax and penalty could be imposed if assessees do not declare the unaccounted cash voluntarily. Also Read - India's Direct Tax, Advance Tax Collections Grow Despite Covid Pandemic, Net Collections at Rs 9.45 lakh crore
The tax rate is higher than 45 per cent tax and penalty charged on undisclosed wealth declared through the one-time compliance window under the Income Disclosure Scheme (IDS) that ended on September 30. As per reports by NDTV, a total of 90 per cent tax and penalty would be charged if deposits are not declared and are detected by tax authorities. Also Read - Government Extends Last Date For Linking Aadhaar with PAN from 31st March to June 30 | Details Here
As per amendment to the Income Tax Act approved by the Cabinet, cash deposits made using the scrapped 500 and 1,000 rupee notes above a threshold may attract 50 per cent tax and 25 per cent of the original deposit, will not be allowed to be withdrawn for four years. There has been a surge in bank deposits from the time Prime Minister Narendra Modi made a surprise announcement of scrapping Rs 500 and Rs 1000 notes and Government is keen to root out benami deposits, particularly in Jan Dhan accounts.(ALSO READ: Rs 500 & Rs 1000 currency notes banned from today! Will Modi government’s surgical strike actually help in curbing black money?) Also Read - After Banning TikTok, India Freezes Bank Accounts of ByteDance For Alleged Tax Evasion: Report
This move was taken to teach the black money holder a lesson for life by paying a higher rate of tax now. As per reports, 60 per cent tax and penalty had been charged on disclosure of foreign black money in 2015. The cabinet on Thursday approved amending the Income Tax Act by adding a clause in one of the sections to provide for the tax on an unexplained income during the window and plans to bring the amendment for approval during the ongoing winter session of Parliament.(ALSO READ: Book My Chotu, a new website lets you “rent” a person to wait in line at banks and ATM!)
The Income Tax Department has already sent warnings that it would be tracking all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account.