Taxation Laws Current Affairs
The Union Government has introduced the Taxation Laws (Second Amendment) Bill, 2016 in the Parliament.
The bill amends existing tax laws to impose a higher rate of tax and penalty in respect of undisclosed incomes. It proposes, Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY), an anti-poverty scheme.
It seeks to attract more people to disclose their unaccounted cash and also to put in a framework in place to use that for the welfare of the people especially in the rural areas.
It also ensures that tax defaulting assessees and black money holders are subjected to tax at a higher rate and stringent penalty provision.
Key features of Bill
- Mandatory for black money declarants to deposit 25% of amount disclosed in Pradhan Mantri Garibi Kalyan Yojana (PMGKY) 2016 for a 4 year lock-in period without interest.
- Those who choose to declare their ill-gotten wealth stashed till now in banned Rs. 1,000 and Rs. 500 currency notes under the PMGKY scheme will have to pay a tax at the rate of 30% of the undisclosed income.
- Additionally, 10% penalty will be levied on the undisclosed income and PMGK Cess (surcharge) at the rate of 33% of tax (33% of 30%).
- Further, the declarants will have to deposit 25% of the undisclosed income in a scheme to be notified by the government in consultation with the Reserve Bank of India (RBI).
- The money from PMGK will be used for projects in irrigation, infrastructure, primary education, primary health, housing, toilets and livelihood so that there is justice and equality.
- For those who continue to hold onto undisclosed cash and are caught they will be levied with flat 60% tax plus a surcharge of 25% of tax (15%), which will amount a levy of 75%.
- Besides, if the assessing officer can charge a 10% penalty in addition to the 75% tax.
Why it is necessary?
In general, evasion of taxes deprives the nation of critical resources which could enable Government to undertake development and anti-poverty programmes. It also puts a disproportionate burden on the honest taxpayers who have to bear the brunt of higher taxes to make up for the revenue leakage. The Taxation Laws (Second Amendment) Bill, 2016 seeks to remove existing redundant provisions of the IT Act, 1961 which can possibly be used for concealing black money. It also ensures that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.