• Criminal liability shall be imposed on disclosure of black money: Taxation Laws (Second Amendment) Act, 2016

    December 21, 2016

    The Taxation and Investment Regime for Pradhan MantriGarib Kalyan Yojana, 2016 introduced that theTaxation Laws (Second Amendment) Act, 2016 will come into force on 17th December, 2016 and the declarations will remain open till the same date.

    According to the new scheme, there will be no immunity with regard to any criminal acts in respect of the disclosures made under the said scheme.

    Highlights of the scheme introduced by amendment are:

    1. The declaration under the scheme can be made by any person with regard to any undisclosed income that may be in the form of cash or deposits in an account with any bank or post office or any other specified entity.
    2. Tax charged will be at the rate of 30% of the undisclosed income, a surcharge at the rate of 33% of tax and penalty at the rate of 10% of such income.
    3.  A mandatory deposit of 25% of the undisclosed income has to be made in Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The deposit made under this scheme is interest free and have a four years lock-in period.
    4. According to the provisions of this scheme, the income declared by the person shall not be included in the total income of that person for any assessment year.
    5. The declarations made under the Scheme shall not be regarded as an admissible evidence under any other Act in force within the territory of India.
    6. No immunity will be available for any criminal activity stated under Section 199-O of the said Scheme.
    7. Non-declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess amounting to 77.25% of such income, if it is declared in the return of income.
    8. In case the income is still not shown in the return of income a further penalty at the rate of 10% of tax shall also be levied followed by prosecution.
    9. The penalty of 200% of the tax payable, given under Section 270A of the Income Tax Act is still applicable and has not been amended under the new scheme.This provision shall continue to apply on all such matters that fall under the aforementioned section of the Income Tax At.
    10. The Taxation Laws (Second Amendment) Act, 2016 has also amended the penalty provisions in respect of search and seizure cases. The existing slab for penalty imposed under section 271AAB has been rationalised to 30% of income, provided that the income is admitted and taxes are paid.Otherwise a penalty at the rate of 60% of the income shall be imposed.


    The Taxation Laws (Second Amendment) Act has brought in a number of changes in the already existing provisions, and thus has made the law, with regard to concealing of income or income from undisclosed sources, even more stringent. These new provisions will surely help the government it tracking black money as well as the people who are responsible for it.

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