Govt allows use of old notes for tax payment under PMGKY

The government today allowed use of junked Rs 500 and Rs 1,000 notes till December 30 for paying tax on disclosures made under the tax evasion amnesty scheme.
After the shock demonetisation of high value notes on November 8, the government allowed the banned currency to be deposited in bank accounts.
Those with unaccounted cash were offered a chance to come clean by paying 50 per cent of it as tax, penalty and surcharge, while parking an additional 25 per cent in a non-interest bearing deposit for four years.
"An opportunity has been given to the public to make the payments towards tax, penalty, cess/surcharge and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 with the old bank notes of Rs 500 and Rs 1000 denomination up to December 30, 2016," an official statement said.

Explaining the provision, an official said a holder of unaccounted cash in Rs 500/1000 notes can now deposit half of it in any of the 29 scheduled bank that are entitled to accept income tax on behalf of the government.
A quarter of the amount can be deposited in cash in the non-interest rate bearing PMGK Deposit Scheme 2016. The remaining 25 per cent can then be deposited in individual bank account.

After December 30, tax as well as the deposit will have to be made through cheque or RTGS transfer.
The government has allowed holders of the scrapped notes to deposit them in their bank accounts till December 30. No scheduled bank will accept them after that date.

The official said the tax authorities are collating information about deposits made in banks post demonetisation and will send notices if any unaccounted income holder does not make disclosures under the amnesty scheme.
While some 3,000 tax notices have already been issued, more will be sent next month after the deposit deadline of December 30 closes.
Those whose bank deposits do not match their income would be asked to explain and offered a chance to come clean under the amnesty scheme, which closes on March 31.
Tax at the rate of 30 per cent of the undisclosed income, surcharge of 33 per cent of tax and penalty of 10 per cent of such income is payable besides mandatory deposit of 25 per cent of the undisclosed income in the PMGK Deposit Scheme.

Income declared under the Scheme will not be included in the total income of the declarant under the Income Tax Act for any assessment year.
Not declaring the black money under the scheme now but showing it as income in the tax return form would lead to a total levy of 77.25 per cent in taxes and penalty. In case the disclosure is not made either using the scheme or in return, a further 10 per cent penalty on tax will be levied followed by prosecution, he added.