The In and Out of Black Money Schemes!
(Last Updated On: February 2, 2017)
Section 115BBE (Tax Treatment of Unexplained Cash):The following comparison will make it easier for you to understand the tax treatment in case of depositing unaccounted money and declaring it in your income tax return.
|Particulars||Old Provisions||New Provisions|
|Income assessable under which section||68, 69, 69A, 69B, 69C, 69D||68, 69, 69A, 69B, 69C, 69D|
|Surcharge||[if applicable]||25% of the tax payable|
|Total Tax Payable||30%*||75%*|
|Penalty on taxable income determined u/s 115BBE [as per section 271AAC]||–||10% (Not Applicable in case the income is declared in the return and tax duly paid)|
* Education & Higher Education Cess will be charged extra
- 30% – where you admit about your undisclosed income, declared the manner of deriving the same, pay proper tax on it and declare such income in your return.
- 60% – in any other case.
- In case of search penalty will be levied u/s 271 AAB;
- In case of tax calculated as per section 115BBE, penalty will be levied u/s 271 AAC; and
- In all other cases penalty will be levied u/s 270A.
Amount of tax to be paid:
|Tax Payable||30% of the income*|
|Pradhan Mantri Garib Kalyan Cess (Surcharge)||33% of the tax i.e. 9.9% of the income|
|Penalty||10% of the income|
|Total Amount Payable||49.9% (50% approx)|
** Education & Higher Education Cess will be charged extra.
- There is a requirement for depositing 25% of your income in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The same will be returned to you after 4 years. Further, you don’t earn any interest on the amount deposited.
- The amount declared in this scheme shall not be included in your total income for any year.
- No deduction or allowance or set off of any loss will be allowed from the income disclosed.
- The amount of tax, surcharge and penalty paid is not liable for any refund.
Let’s understand all the three options by way of the table below:
|Option Availed||Declared himself under the PMGKY scheme||Declared while filing return of income||Didn’t declare take chance of being caught by Department|
|Tax Rate||50% approx (30% tax, 9.9% surcharge, 10% penalty on income)||75% (60% tax and 15% surcharge on income)||85% approx (60% tax, 25% surcharge & 10% penalty on tax and surcharge)|
|Amount Payable to Income Tax Department||5,00,000||7,50,000||8,50,000|
It is clear from this move that instead of allowing people to make out ways for converting their black money into black money again, the Government has given one last chance to the money hoarders to come clean by declaring the amount of money and paying the due taxes and penalties as levied. We agree that no better chance for converting your undisclosed money into legal money would have been given by the Government. So, make the most out of it!