One time 60% fine for voluntary cash disclosures

The government has devised a two-track approach towards disclosure of unaccounted cash in excess of the Rs 2.5 lakh threshold announced by PM Narendra Modi by setting a moderate penalty for voluntary action but imposing stiff fines on tax evaders caught trying to beat demonetisation. Those who come forward with disclosures will be asked to pay a penalty of 60% of the amount. This will ensure that the cash that remains with them becomes & quot white& quot , providing a legal alternative as opposed to illegal parking slots like gold, real estate or offshore accounts. The new penalty is higher than the 33.9% tax levied on current (high) income. However, those detected trying to squirrel money into multiple accounts or converting it into other assets will face the full force of the law, a senior government source said. The 60% penalty option is seen as income declaration scheme part 2 with a rate that is higher than the 45% fine in the just concluded IDS 2016. The funds collected through fines will be placed in a & quot PM Garib Kalyan Kosh& quot planned by the Centre & mdash a measure intended to underline the government's claim that demonetisation is a pro-poor measure. The 60% penalty (35% tax Fines To Go To PM's Welfare Fund For Poor plus 25% fine) is seen as an incentive for individuals and entities who might have baulked at the 200% fine on tax due as per the current law. It is intended to close the loophole in the existing law which could have helped those making unusual deposits in their accounts since November 9 and paying the standard 33.9% tax provided for income exceeding Rs 10 lakh annually. Many tax experts have said that those declaring significantly higher deposits can declare the income in their tax returns for the current financial year. The returns have to be filed in the next financial year and so there is room for those with previously undisclosed income by paying a lower fine. Though government officials did not spell out what the fine for evaders will be, it is likely to be not much less than the 200% set for & quot misreporting of facts& quot as set out in an official release on the 2016-17 Union Budget. The dual approach, described as two schemes by the source, was cleared by the Cabinet on Thursday night. The details have not been officially announced yet, perhaps due to Parliament being in session. The schemes envisaged by the government will require amendment of the income tax laws that require passage by Parliament. A 60% fine will strike a balance between situations where black money holders might escape with a normal tax rate or face a very prohibitive fine. The penalty rate is higher than the 45% for the recently concluded income declaration scheme but not so high as to be a severe disincentive.

OUR TAKE

The people who have looted the country and the people of this country should not be spared. The Initiative taken by the Prime Minister should be completed. Otherwise, it will be a shame on the country, if we let the loot still go on. A thorough check on all these fraud and black money accounts should be made and we are sure much more will be unearthed. The government needs to work hard to instill back the confidence in the citizens after the demonetization move. And what better way to do that than by giving the country back the money that was looted!