After the withdrawal of currencies of Rs.500 and Rs.1,000 Government of India proposed the changes in penalty clauses calling it as Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY).
These changes were done after there is a huge concern by many who holding black money that penalty will be higher or they have to suffer a lot. In the backdrop of this, Government came up and proposed these tax amendments.
Pradhan Mantri Garib Kalyan Deposit Scheme, 2016
The Government of India announced this special scheme on 16th December, 2016. This will come into force from 17th December, 2016 to till 31st March, 2017.
Who can deposit in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016?
The deposit under this Scheme will be made by any person who intends to declare undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.
The deposits will be held at the credit of the declarant in Bonds Ledger Account maintained with Reserve Bank of India.
A certificate of holding the deposit shall be issued to declarant in Form I.
How to deposit in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016?
The deposits will be accepted at all the authorised banks notified by Government of India. The deposits will be made in multiples of rupees one hundred.
The deposit under sub-section (1) of section 199F by a declarant will not be less than 25% of the undisclosed income to be declared under sub-section (1) of section 199C of the Act.
The entire deposit to be made under sub-section (1) of section 199F under this Scheme will be made, in a single payment, before filing declaration under sub-section (1) of section 199C.
The deposit will be made in the form of cash or draft or cheque or by electronic transfer and shall be drawn in favour of the authorised bank accepting such deposit.
What is the effective date of Pradhan Mantri Garib Kalyan Deposit Scheme, 2016?
The effective date of opening of the Bonds Ledger Account will be the date of tender of cash or the date of realisation of draft or cheque or transfer through electronic transfer.
Application of Pradhan Mantri Garib Kalyan Deposit Scheme, 2016
An application for the deposit under this Scheme will be made in Form II clearly indicating the amount, full name, Permanent Account Number, Bank Account details (for receiving redemption proceeds), and address of the declarant: Provided that if the declarant does not hold a PAN, he shall apply for a PAN and provide the details of such PAN application along with acknowledgement number.
Nomination under Pradhan Mantri Garib Kalyan Deposit Scheme, 2016
# A sole holder or a sole surviving holder of a Bonds Ledger Account, being an individual, may nominate in Form III, one or more persons who shall be entitled to the Bonds Ledger Account and the payment thereon in the event of his death.
# Where any amount is payable to two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds Ledger Account shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly. In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination.
# A nomination made by a holder of Bonds Ledger Account may be varied by a fresh nomination or may be cancelled by giving notice in writing to the Authorised Bank in Form IV.
# Every nomination and every cancellation or variation shall be registered at the Reserve Bank of India through the authorised bank and shall be effective from the date of such registration.
# If the nominee is a minor, the holder of Bonds Ledger Account may appoint any person to receive the Bonds Ledger Account or the amount due in the event of his death.
The transferability of the Bonds Ledger Account shall be limited to nominee or to the legal heir of an individual holder, in the event of his death.
Interest rate on Pradhan Mantri Garib Kalyan Deposit Scheme, 2016
This scheme will not offer any interest on your deposit.
Term of Pradhan Mantri Garib Kalyan Deposit Scheme, 2016
The Bonds Ledger Account will be repayable on the expiration of 4 years from the date of deposit and redemption of such Bonds Ledger Account before its maturity date will not be allowed.
Declare the undisclosed wealth under Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)
If you declare the undisclosed wealth under Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY), then you have to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income. Further, a surcharge to be called ‘Pradhan Mantri Garib Kalyan Cess’ @33% of tax is also proposed to be levied. In addition to tax, surcharge, and penalty (totaling to approximately 50%).
Along with the above-said tax, penalty, and cess, the declarant will have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’. This amount is proposed to be utilized for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc., so that there is justice and equality. This is a FREE deposit scheme of four years.
If you hold undisclosed wealth and not declare it
If you hold undisclosed wealth and caught by IT department, then flat 60% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%. Besides, if the assessing officer decides he can charge a 10% penalty in addition to the 75% tax.
Therefore it mounts to be more than 75% of the wealth which you have to pay on any such undisclosed wealth. Also, do remember that no expense, deductions, set-off is allowed.
The same is explained in below image.
Do note that this Taxation Laws (Second Amendment) Bill, 2016 introduced in Lok Sabha as “Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY). It is yet to be passed and then will be considered as act. Hence, let us wait what will happen.
Refer our latest post related to demonetization-
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