All you need to know about the Pradhan Mantri Garib Kalyan Yojana, 2016

Following the shocking move of currency ban which aims at removal of black money in India, the Central Government has introduced the Pradhan Mantri Garib Kalyan Yojana, 2016 last week. The scheme is the final bell to all the Black Money holders to surrender their unaccounted money before the Government, after Income Declaration Scheme, 2016 and demonetisation.

In order to insert a new chapter containing provisions relating to the scheme, the parliament has passed  The Taxation Laws (Second Amendment) Act, 2016. The taxpayers can make use of the scheme from 17.12.2016 to 31.03.2017.

According to the new scheme, the persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity (which includes banks, post office etc.) to declare such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent of such declared income.The Scheme further, provides for a mandatory deposit of not less than 25% of the surrendered income with the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, which has been separately been notified by the Department of Economic Affairs.

Features of the Scheme

1. A declaration under the said Scheme may be made in respect of any income in the form of cash or deposit in an account maintained by the person with a specified entity, chargeable to tax under the Income-tax Act for any assessment year commencing on or before the 1st day of April, 2017. However, no deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed against such income in respect of which a valid declaration is made under the Scheme.
2. The declarant shall pay 30 percent of the unaccounted income as tax with an additional levy of surcharge at the rate of 3% of such tax. Besides, penalty of 10% of the unaccounted income will be levied.
3. The declarants are also required to deposit not less than 25% of such income with the PMGKY Deposit Scheme. The amount so deposited shall have a lock-in period of four years without any interest.
4. The scheme is valid from 17.12.2016 to 31.03.2017. The tax, surcharge and penalty payable under the Scheme and deposit to be made in the Deposit Scheme, shall be paid/made before filing of declaration under the Scheme.
5. The declaration shall be accompanied with proof of payment made in respect of tax, surcharge and penalty payable under the Scheme and proof of deposit made in the PMGKY Deposit Scheme.
6. The declarations made by misrepresentation or suppression of facts or without payment of tax and surcharge or penalty or without depositing the requisite amount in the PMGKY Deposit Scheme shall be deemed as void and in such cases, all the provisions of the Income-tax Act, including penalties and prosecutions, shall apply accordingly.
7. It has been clarified that the amount paid as tax, surcharge or penalty under the scheme is not refundable at any circumstances.

Procedure

• In order to avail the scheme, the person shall submit form-Ias prescribed in the Rules within 31.03.2017.
• The declaration can be filed
• electronically under digital signature with CIT(CPC) Bengaluru or jurisdictional Principal CIT/CIT notified under section 120 of the Income-tax Act, 1961.
• Electronically through Electronic Verification Code (EVC) or in print form with jurisdictional Principal CIT /CIT notified under section 120 of the Income-tax Act, 1961.
• After such declaration has been furnished, the notified Principal CIT/ CIT will issue an acknowledgment in Form-2 to the declarant within 30 days from the end of the month in which the declaration under Form-1 is made.

Declarations not eligible for the scheme in certain cases

The provisions of the scheme shall not be applicable in the following cases.

1. Declarations in relation to any person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to the conditions specified under the Scheme.
2. Declarations in relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988, the Prohibition of Benami Property Transactions Act, 1988 and the Prevention of Money-Laundering Act, 2002;
3. If the declarant is a person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;
4. Declarations in relation to any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.