Demonetisation: 50% tax on unaccounted money
New Delhi: A minimum of 50 percent tax would be imposed on unexplained bank deposits made with the high denomination banned currency notes till December 30, according to the amendments to the Income Tax Act approved by the cabinet on Friday.
Apart from this, a quarter of the unaccounted amount (or half of the remaining amount) would stay with the government for next four years. The amendments would be brought to the Parliament soon.
A higher 90 percent tax and penalty could be levied if anyone doesn’t declare the unaccounted cash voluntarily.
Earlier on November 8, the government had demonetised Rs 500 and Rs. 1,000 notes and had given a 50-day window, beginning from November 10, for depositing the scrapped currency notes or exchanging them for new currency from the banks.
Although, the exchange of scrapped notes, which was limited to Rs 2,000 per person, has been withdrawn, all old notes can be deposited in bank accounts without any ceiling.
Since the demonetisation, the zero-balance Jan Dhan accounts have swelled surprisingly, accounting for more than Rs 21,000 crore in just two weeks. This has led to suspicion that these accounts may have been used to process the black money.
As earlier the tax authorities had declared to impose a 200 percent penalty in case of any unexplained deposit above Rs 2.5 lakh during November 10 to December 30, many believed that depositing smaller than Rs 2.5 lakh amounts in zero-balance accounts would make their black money untraceable. But the government has come up with a counter plan.
The government is planning to bring the amendments for approval during the ongoing Winter Session of the Parliament.
The experts believe that the decision would help the country curb black money but its purpose wouldn’t be achieved if that money would make way into the system through benami deposits.