AGENCY
New Delhi: Unaccounted deposits in scrapped currency notes up to December 30 if declared to taxmen will attract 50 per cent tax, along with a lock-in of 4 years, sources said.
In case the disclosure is not made and the unaccounted money is detected by tax authorities, it will be charged with 60 per cent tax and a longer lock-in period, the sources added.
The proposal was considered by the Cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday night.
“The government will introduce amendments to the Income Tax Act giving effect to this in the ongoing session of Parliament,” a source said.
The government is keen to tax all unaccounted money deposited in bank accounts after it allowed the banned currency to be deposited in bank accounts during a 50-day window from November 10 to December 30, the sources added.
The 60 per cent tax and penalty had been charged on disclosure of foreign black money scheme last year.
Sources said the government is keen to root out benami deposits, particularly in Jan Dhan accounts.
The government is likely to introduce the amendments to the Income Tax Act in Parliament on Monday or Tuesday after seeking President’s nod.
Government, they further said, is also contemplating coming out with a bond in which the 25 per cent ‘lock-in’ money would be parked and can be withdrawn after 4-years by the depositor.
Out of the additional taxes on unexplained and undisclosed deposits, government will create a fund to build rural infrastructure, they added.
Prime Minister Narendra Modi’s November 8 shock ban on high-denomination currency notes had swept away 86 per cent of the currency in circulation in the biggest-ever crackdown on black money, corruption and counterfeit currency.
The move had led to Rs 14 lakh crore worth currency being withdrawn from circulation.
Yesterday’s Cabinet meeting, summoned at a very short notice, cames amid reports of high tax penalty terrifying people from putting their cash savings in the formal banking system.
The sources said the government wants all of the 500 and 1,000 banknotes to be deposited and not burnt or destroyed for the fear of penal action.
The Income Tax Department had previously warned that cash deposits above Rs 2.5 lakh threshold post demonetisation decision could attract tax plus a 200 per cent penalty in case of income mismatch.
It was stated that the department was tracking all cash deposited during the period of November 10 to December 30, 2016, above a threshold of Rs 2.5 lakh in every account.
This had instilled fear in people with reports of the banned currency even being destroyed.
