Question: What is Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)?
(a) Scheme launched for social welfare
(b) Scheme for downtrodden
(c) Scheme proposed under Taxation Laws (Second Amendment) Bill, 2016
(d) None of the above
Ans: (c)
Related facts:
- The Taxation Laws (Second Amendment) Bill, 2016 was introduced and passed by a voice vote in Lok Sabha on 28th November, 2016.
- This Bill seeks to impose a higher rate of tax and levy of penalty in respect of certain incomes.
- It also provides for a scheme for payment of tax, penalty and surcharge on the undisclosed income and investment of certain amount of such income in the Pradhan Mantri Garib Kalyan Deposit Scheme.
- The Bill is proposed to be administered by the Central Board of Direct Taxes. Thus, no additional expenditure is contemplated on the enactment of the Bill.
- A scheme namely, ‘Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) is also proposed in the Bill.
- In the wake of the recent demonetization drive concerns have been raised that some of the existing provisions of the Income-tax Act, 1961 (the Act) can possibly be used for concealing black money.
- The Taxation Laws (Second Amendment) Bill, 2016 (‘the Bill’) has been introduced in the Parliament to amend the provisions of the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision.
- The existing system 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 declarant under this regime shall be required to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income.
- Further, a surcharge to be called ‘Pradhan Mantri Garib Kalyan Cess’ @33% of tax is also proposed to be levied.
- In addition to tax, surcharge and penalty (totaling to approximately 50%), the declarant shall have to deposit 25% of undisclosed income in a Deposit Scheme to be notified by the RBI under the ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’.
- There had been suggestions from experts that instead of allowing people to find illegal ways of converting their black money into black again, the Government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean so that not only the Government gets additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy.
- This amount is proposed to be utilised for the schemes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood, etc., so that there is justice and equality.
Reference:
http://pib.nic.in/newsite/PrintRelease.aspx?relid=154450
http://www.news18.com/news/india/income-tax-amendment-bill-passed-despite-opposition- protest-1317320.html