With the restriction on 500 and 1,000-rupee notes now over two weeks old, the government has proposed new rules to tax black money that is being uncovered. The bill was submitted today for parliament's audit by Finance Minister Arun Jaitley as the government is being assaulted by a unified resistance over its sudden withdrawal of 86 % of the notes available for use to check black money and corruption. The move has plunged the nation, particularly rural India, into a major cash shortage.
The old 500-and 1,000-rupee notes must be deposited in banks by the end of the year. Deposits over 2.5 lakhs will be studied by tax officials.
Those who acknowledge they have placed black or previously untaxed money in their accounts will pay 50 per cent in a combination of levies and taxes.
A disclosure scheme called the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 allows people to deposit money till April by paying 50 per cent of the total amount — 30 per cent as tax, 10 per cent as penalty and 33 per cent of the taxed amount — that is 10 per cent — as Garib Kalyan Cess.
So the taxes and levies will equal nearly 50 per cent of the deposit. 25 per cent of the money that remains after taxes will be available to the account holder.
The other 25 per cent or rest of the black money that's being converted will be used by the government for four years in a special new fund that will be called the Pradhan Mantri Garib Kalyan Yojana and will be used by to fund welfare schemes. No interest will be paid to the owner for this.
If the owner refuses the option of the government bond mentioned above, 85 per cent of the amount will be taken in taxes and penalties.
For money that is found in raids, taxes and penalties will take nearly 90 per cent of the amount, leaving 10 per cent with the owner.
The new proposal was brought to parliament today by Finance Minister Arun Jaitley.
It is almost certain to be cleared in this winter session of parliament because it is being considered by the Lok Sabha, where the government has a huge majority.
As a Money Bill, it will be reviewed by the Rajya Sabha, but cannot be rejected by the Upper House, where the government is in a minority.