IDS-2016 Part-2 with 50 percent tax, lock in period for declared income with 0% interest-As reported in media

IDS-2016 Part-2 with 50 percent tax, lock in period for declared income with 0% interest. According to media, Govt may amend tax laws soon. On 28-11-2016 Finance Minister has introduced PMGKY 2016 Yojana to this effect Click Here to read more >> 

IDS-2016 Part-2 with 50 percent tax

Some section of media has reported that Government may come up with one more chance for declaration of domestic black money by bringing yet another Income Declaration Scheme (IDS) part-2.

As reported, the new IDS-2 (PMGKY Yojana-2016) may provide as under:

(a) declared black money to be taxed @ 50%
(b) declared black money to be locked in for minimum of 3-4 years
(c) locked in black money not to bear any interest.

After demonetisation and withdrawal of Rs. 500/- and Rs. 1000/- bank currency notes, the Income Tax Department is actively issuing notices, conducting surveys, search/raids and crores of demonetised bank notes have been seized. Government and CBDT both have issued continual warnings of strict action coupled with prosecution.

With the each passing day of approaching deadline of 30th December, 2016 for depositing old bank notes in banks, this has prepared a perfect launchpad for introducing the IDS-2016 Part-2 for those who have already missed IDS-2016 and desperately looking for a way out change the colour of their money.

It is notable that the Finance Act, 2016 (28 of 2016) has introduced Chapter IX (section 181 to 199 of the Finance Act-2016) which  provided for The Income Declaration Scheme, 2016. Section 184 as above had provided a total tax and penalty incidence of 45% on income so declared which was calculated as under:

(a) Income tax @ 30% 30.00%
(b) Krishi Kalyan Cess on tax @ 25% of tax rate of 30% 07.50%
(c) Penalty @ 25% of tax rate of 30% 07.50%
Total 45.00%

It is reported in Media that the Prime Minister Narendra Modi led NDA Government is likely to amend Income Tax Laws in this regard. 

Would the amendments be made in the Form of Money Bill?
However, the important would be to see how the Government is going to get the amendments passed in both the houses in view of the deadlock in the Lok Sabha and its clear minority in Rajya Sabha. It would be interesting to see if Finance Minister would seek a shortcut to avoid facing the Rajya Sabha and bypass the democratic setup by introducing such amendments as Money Bill.

It should be noted that if done this would not be the first time, as this Government despite severe criticism, has already done it with respect to Aadhaar Bill, 2016 by passing it as Money Bill.

Once the amendments are pushed through as Money Bill, suitable Rules could be notified under the powers conferred under section 199 of the Finance Act, 2016 or as amended.

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