After PM Modi's surgical strike on black money, cases of cash crunch, money laundering, and illegal exchange of discontinued notes started to surface which led to economic mess. So, after analyzing the recent movements, a new scheme Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) for disclosure of unaccounted money has made its way through Lok Sabha, hoping the offer will bring a large amount of untaxed money back into the economy.
The Department of Revenue will by the end of the week notify PMGKY 2016, which was a part of 'The Taxation Laws (Second Amendment) Bill, 2016' and was approved by the Lok Sabha on November 29. This scheme gives an opportunity to all the black money holders to come out clean by declaring their undisclosed income and paying heavy taxes and penalty, which amounts to approximately 50 % tax of the undisclosed income. Apart from paying tax and penalty, the declarants will also be required to deposit 25% of the amount disclosed in the PMGKY, which will be interest free deposits locked in for a period of 4 years. This money will be utilized for poverty welfare measures.
The disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund and there would be relief from Wealth Tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics and foreign Black Money Act. In case the assessee does not declare the illegal income, the government proposes a tax burden of more than 80% and a stringent penalty in cases where such income has been unearthed through a search operation.