Have black money and just don’t know what to do with it? Plenty of old 500 and 1000 rupee notes lying around at home? It’s time to declare this black money. Yes…the Government is giving you a great opportunity to declare your black money, through an income disclosure scheme. The Government is planning a scheme, where if you declare your black money, you would have to pay tax of just 50% on this amount. Left stranded with black money in old 500 and 1000 rupee notes…It’s time to come clean.
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The Government is planning an income disclosure scheme called, where you can declare your black money and get away, just by paying 50% tax. The Government will be able to collect a lot of money in tax. This money will be used in welfare schemes for the poor. But….you need to declare your unaccounted money (black money), voluntarily. This is how the scheme works….
You declare your black money and pay a tax + penalty + surcharge = 50% of the amount deposited.
Then…a 4 year lock-in for 25% of the undisclosed income.
This scheme will last till December 30th 2016. This could be your last opportunity to declare black money. So grab it with both hands…. Yes….the income declaration scheme comes with a very attractive name, Pradhan Mantri Garib Kalyan Yojana 2016. You can deposit your old 500 and 1000 rupee notes and enjoy immunity from certain tax laws. The money you deposit enjoys immunity from wealth tax, civil tax and other taxation laws. However, you get no immunity from foreign exchange violations, narcotics and black money laws.
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Just take a look at the name of the scheme…. Pradhan Mantri Garib Kalyan Yojana 2016. Yes…when you voluntarily declare your black money, the Government taxes it at 50%. You deposit money in banned 500 and 1000 rupee notes, in the Pradhan Mantri Garib Kalyan Yojana. You pay a tax of 30% on your undisclosed income + penalty of 10% on this undisclosed income + surcharge called Pradhan Mantri Garib Kalyan Cess of 33% on the tax (33% of 30% tax). All this adds up to around 50% in tax. You are able to enjoy immunity from certain taxation laws, just by paying a 50% tax on undisclosed income.
There’s more…25% of the undisclosed income which you declare, will have to be mandatorily deposited in a zero-interest deposit scheme. This scheme is called Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. Your money is locked-in for 4 years. You cannot touch this money for 4 years. No interest is paid to you, on this money which you deposit in the zero-interest deposit scheme. The Government gets to use this money, free of cost for 4 years, for the welfare of the poor. This money is utilized for irrigation, housing, construction of toilets, primary health, education and even infrastructure.
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Well…You deposit black money, in old 500 and 1000 rupee notes, at the bank and hope to get away with it. If the tax department catches you, it imposes a stiff penalty of up to 85% of undisclosed income. The tax department will charge 60% tax on undisclosed income + 25% surcharge tax (This is 15% of the undisclosed income). The assessing tax officer might charge an additional 10% penalty. You land up paying a whopping 85% in tax, on the undisclosed amount.
The Pradhan Mantri Garib Kalyan Yojana is a win-win scheme, both for black money hoarders and the Government. There is no need to dump black money, in Jan Dhan bank accounts of poor citizens. No need of burning all those 500 and 1000 rupee notes. Just declare this money….pay a 50% tax….you’re happy. The money goes to where it belongs. Welfare schemes for the poor. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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