50% tax, 4 yr lock-in period On Unaccounted deposits
The Union Cabinet on Friday night decided to amend the existing Income Tax Act that is being misused ever since the demonetization was rolled out.
As per the amendment, unaccounted cash deposits made using the old Rs 500 and Rs 1,000 denomination currency up to 30th December above a threshold will attract a minimum of 50 per cent tax. While at least 50 per cent of the unaccounted money will go into the coffers of the govt. in the form of tax, half of the remaining deposit or 25% of the total deposit will not be allowed to be withdrawn for a period of minimum four years.
If unaccounted money holders do not voluntarily make such deposits fearing the high tax then they will be subjected to 90 percent tax and penalty when the tax authorities catch them sooner or later. The government plans to bring the amendments for approval during the ongoing winter session of Parliament.
Earlier, the tax authorities announced to levy a high rate of tax and also 200% penalty on the deposits over Rs 2.5 lakh during the 50 day window. However, after taking the feedback from economic experts, the Cabinet is reported to have decided to amend this clause in the Income Tax Act.
It may be recalled that when the govt. offered people a chance to declare their unaccounted money under the Income Disclosure Scheme (IDS) that ended on September 30, it levied 45 per cent tax and healthy penalty on such undisclosed declarations.
An official from the Income Tax dept. said that those black money holders who did not utilize the governmentâ€™s offer and declare their unaccounted wealth under IDS, will now have to pay a higher tax and penalty.