You have a duty to the Nation. You have to pay your income tax in time. Money is needed for building the infrastructure of the Nation….Welfare schemes for the poor….The Government collects money in taxes and uses it for the growth and progress of the Nation.
The bottom line….You have to pay tax on the income you earn, above a certain limit. Now, you are very careful while filing income tax returns (ITR). But…mistakes happen. In a rush to file ITR within the due date, you have committed some mistakes. You want to correct these mistakes. How can you correct them?
The common mistakes you commit….You have not reported all your income. You have wrongly filled bank account details. Fortunately, you have a way to correct these mistakes. You can file revised returns, provided you file your ITR, within the due date. The Government scrapped 500 and 1000 rupee notes on November 8th 2016, to stop corruption, fueled by black money. The tax department has noticed that citizens are hiding black money by filing revised income tax returns. How are citizens using revised returns to hide black money? Let’s find out.
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Many citizens are boldly dumping black money in old 500 and 1000 rupee notes in banks. Depositing black money in banks, does not convert it to white. Tax has to be paid on this money. Only then it becomes white money.
The Government says…
Declare your black money under Pradhan Mantri Garib Kalyan Deposit Scheme and pay a tax + penalty + surcharge = 50% of the amount deposited.
Then…a 4 year lock-in for 25% of the undisclosed income. You don’t get interest on this amount.
Now citizens say….Why pay so much tax on black money? Is there a way out? Let’s say you have filed your ITR for the Financial Year 2015-2016, within the due date (July 31st 2016). The Assessment Year is 2016-2017. You can file revised returns before March 31st 2018. Similarly if you have filed your ITR for the Financial Year 2014-2015, within the due date, you can file revised returns before March 31st 2017.
The tax department feels citizens are misusing revised returns, to hide unaccounted money. Citizens are revising the income tax returns filed by them in the earlier assessment year. Their intention….They can show current year’s undisclosed income (black money in scrapped 500 and 1000 rupee notes) in the previously filed ITR.
You can show current undisclosed income, as earnings of FY 2014-15. You then file revised returns before March 31st 2017. The maximum tax you would have to pay on this undisclosed income…Just 33% income tax.
You are allowed to file revised income tax returns, only if there is an omission or a wrong statement made, while filing your original income tax returns. You are not allowed to make changes in your initial income declared, by which you manipulate/alter the form/substance/quantum, of your earlier disclosed income.
If the tax department suspects you are manipulating income (using revised returns to hide black money you currently have in old 500 and 1000 rupee notes), a thorough scrutiny will be made. The tax department will scrutinize (take a proper look), at what could be your income of the year. If you are caught manipulating income, you would have to pay a penalty and could even be prosecuted. The tax officer could charge 100% to 300% tax, on the amount you have tried to evade.
Yes…there are few ways left for you to hide black money. The Government seems intent on catching you….whatever you do. It’s best to make use of the Pradhan Mantri Garib Kalyan Deposit Scheme and declare black money. Pay your taxes and enjoy life. Be Wise, Get Rich.
Mr C.S.Sudheer is a management graduate. 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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