Pay Tax & Deposit PMGK Scheme First , Then Only One Can Declare Under PMGKY !


Pradhan Mantri Garib Kalyan Yojna 2016 is income  declaration scheme (IDS) two . The necessity for introduction of scheme is already explained in the Bill , but in my considered opinion , the real intention of government is to collect the black money voluntarily rather than fighting legal battles  before court where more often Court favours assessee than the govt. on account of legal loophole, shoddy investigation and poorly drafted assessment orders. The legislation for the scheme clearly shows that the government has partially learnt from the bogus declarations made in IDS -1 where some people just filed declaration for Lkahs of crore and did not deposit any tax. So , this time the govt. has inserted law that first you need to pay tax , surcharge and penalty and then only declaration can be made.Here are answers to a few frequently asked questions about the PMGKY 2016

1. When will declaration start and what is last date of declaration ?

The PMGKY scheme starts on 17th December 2016 and ends on 31st March 2017

2. Who can declare under PMGKY ?

Any person who desires to declare income in form of cash or deposit with RBI or Banks or Cooperative banks or Post Office or sub-post office [Refer section 199A of the Finance Act 2016

3. How the tax be computed ?

As per section 199D of Finance Act 2016 , tax will be the aggregate of following

(i) 30% tax on undisclosed income declared

(ii) Surcharge @ 33% of tax computed on (i) above

(iii) Penalty @ 10% of the undisclosed income

Apart from tax above, you wil have to deposit 25% of the undisclosed income   in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 . No interest shall be paid and you can be withdrawn only after four years from date of deposits .

4. How the declaration to be filed ?

  1. The declaration has to be in Form-1 and shall be filed in

(a) electronically under digital signature; or

(b) through transmission of data electronically under electronic verification code; or

(c) in print form.

  1. You can revise the Form-1 if one discovers any omission or any wrong statement therein.
  2. Pr.CIT/CIT shall issue a Certifcate of Declaration in Form 2 within one month from the date of filing of Form-1

5. When is the tax required to be paid ?

All payments including the deposit in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 are required to be paid before declaration is made under PMGKY 2016. This is clear from section 199H of the Finance Act 2016

199H. (1) The tax and surcharge payable under section 199D and penalty payable under section 199E in respect of the undisclosed income, shall be paid before filing of declaration under sub-section (1) of section 199C.

(2) The amount referred to in sub-section (1) of section 199F shall be deposited before the filing of declaration under sub-section (1) of section 199C.

(3) The declaration under sub-section (1) of section 199C shall be accompanied by the proof of deposit referred to in sub-section (1) of section 199F, payment of tax, surcharge and penalty under section 199D and section 199E, respectively.

6. If I declare and but later wants to withdraw the declaration . Can I do that ?

No. Section 199K of the Finance Act 2016 provides that any amount of tax and surcharge paid under section 199D or penalty paid under section 199E shall not be refundable.

7. Who can not declare under PMGKY 2016?

Following persons can not participate in PMGKY 2016

(i) by a person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 read with other conditions attached it it

(ii) If declaration relates to any thing for which prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988, the Prohibition of Benami Property Transactions Act, 1988 and the Prevention of Money-Laundering Act, 2002;

(iii) if any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;

(iv) If the declaration relates to  any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.