After a reasonable success of its first Income Declaration Scheme (IDS), the central government has again come up new IDS called as Pradhan Mantri Garib Kalyan Yojana. This is the second income disclosure scheme brought in by the government this year, and the first after the cancellation of old high-value banknotes on 8 November, 2016.
The new IDS has been notified along with other provisions of the Taxation Laws (Second Amendment) Act, 2016, on 16th December and has come into effect from 17th December, 2016.
Tax evaders can declare their undisclosed or black-money under PMGKY Scheme till 31st March, 2017.
Under this scheme, a declarant of undisclosed income needs to pay a Tax of 30%, a Penalty of 10% and a Pradhan Mantri Garib Kalyan Cess of 33% on the tax, all of which add up to around 50%.
In addition to the above penalty, the declarant will have to deposit 25% of the undisclosed income in the zero-interest ‘Pradhan Mantri Garib Kalyan Deposit Scheme 2016‘ for four years.
Under the old Income Declaration Scheme, a tax evader has to first declare the undisclosed income and then has to pay the tax penalty & dues. Whereas, under PMGKY Scheme, the procedure is as below;
- Let’s assume a tax evader is declaring Rs 1 Lakh as undisclosed income under this scheme.
- A tax evader has to first pay Tax on the black-money (or) undisclosed that he/she is going to declare under the new scheme.
- The applicable income tax on Rs 1 Lakh is @ 30% –> Rs 30,000
- Applicable Surcharge is @ 33% on tax –> Rs 9,900
- Applicable penalty is @ 10% on undisclosed income (Rs 1 Lakh) –> Rs 10,000
- So, the total tax is Rs 49,900 (Rs 30k + Rs 9.9k + Rs 10k).
- Tax can be paid online through e-Filing portal (or) at bank branches (the necessary PMGKY Challans have been made available at any bank branch other than Co-operative bank or Post office branches).
- Has to put 25% of the declared income i.e., Rs 25,000 in the PMGKY Deposit Scheme. This is locked for four years and no interest income on this deposit is paid to the declarant. The declarant has to take acknowledgment receipt from the bank/post office. (As per Govt’s latest notification, the deposit of 25% of the declared income under this Scheme can be made, on one or more occasions. The deposits shall be made before filing declaration – updated on 08-Feb-2017.)
- After paying the applicable taxes & depositing 25% of the declared income, the tax evader has to submit Form-1 through online or offline modes. The declarant has to provide personal details, contact details, PAN, declared income details, tax paid details & PMGKY deposit acknowledgment details in Form 1.
- After receiving the Form 1, the IT department will issue Form 2 (acknowledging the receipt of form-1 & taxes) to the declarant within 30 days of receiving Form1.
How to declare Undisclosed Income under PMGKY Scheme online? (through Income Tax Dept’s e-Filing portal)
Below is the procedure to file your undisclosed income under Pradhan Mantri Garib Kalyan Yojna Scheme 2016 through Income Tax Department’s e-Filing portal;
- Kindly login to e-Filing portal with your credentials.
- Click on newly enabled ‘PMGKY’ tab and then click on ‘Prepare & submit online Form 1 (PMGKY)’.
- If you have Digital Signature, can submit the Form to CIT CPC Bengaluru. In case, you do not have digital signature, you can select ‘Jurisdictional CIT’ option. Click on ‘continue’ button.
- You will get access to Form 1. It has four tabs namely ; instructions, Form 1, Verification (self-declaration) & Attachments. Click on Form 1 tab.
- You have to provide your address, contact number, email-ID, PAN number, Aadhar number (optional) etc in the first few sections of the form.
- In the next few sections, you can provide details regarding; total amount of undisclosed income declared, details of amount held in cash, details of amount deposited in bank(s) account(s) etc., Kindly note that the tax amounts are auto-calculated/auto-populated.
- You have to provide tax paid details like BSR code of bank, date of tax deposit, Serial number of Challan, tax amount etc.,
- In the final section of Form 1, you have to declare details of amount deposited in Pradhan Mantri Garib Kalyan Deposit Scheme.
- You may click on ‘Save Draft’ to save your details.
- Click on ‘Verification’ tab and provide your ‘self-declaration’.
- Click on ‘Attachments’ to upload ‘Tax paid Challan receipt’ & ‘Proof of deposit in PMGK Deposit scheme’.
- You may verify the details once and click on ‘Submit’ button.
(Click here to download PMGKY Scheme’s Form 1 & Form 2 templates. You can submit the physical forms to the concerned jurisdictional tax office. )
If your income has been property accounted for, you can deposit unlimited amount of cash in your bank account. No worries at all!
In case, you have black money or undisclosed income, do not think that you can convert it into white money just by depositing it in bank account(s). It is a mis-conception!
As per the Govt, this is going to be the last chance to convert your black money in to white money through an IDS Scheme. Kindly note that the declarations made under PMGKY scheme will be kept confidential, and those coming clean will not be prosecuted under other legislations such as Central Excise Act, Wealth Tax Act, Companies Act,
However, there will be no immunity from prosecution under criminal acts like the Prevention of Corruption Act and Prevention of Money Laundering Act.
The government has also encouraged people to come forward with information about tax evaders by emailing such information to firstname.lastname@example.org.
Latest update (22-April-2017) :
Govt has received various representations from stakeholders stating that in some cases tax, surcharge and penalty have been paid on or before 31st March, 2017 but the corresponding deposit under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (Deposit Scheme) could not be made by the said date. Accordingly, DEA vide notification S.O.1218(E) dated 19th April, 2017 has extended the date of making deposit under the Deposit Scheme upto 30th April, 2017 in respect of cases where tax, surcharge and penalty under PMGKY has been paid on or before 31st March, 2017.
Subsequently, CBDT vide Circular No.14 of 2017 dated 21st April, 2017 has extended the date of filing of declaration under PMGKY to 10th May, 2017 in cases where tax, surcharge and penalty under PMGKY has been paid on or before the 31st March, 2017, and deposit under the Deposit Scheme has been made on or before the 30th April, 2017.
(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post published on 19-December-2016)