Mother of all taxes waiting for unaccounted deposits

The government may amend the Income Tax Act to levy about 60 per cent tax on unaccounted money deposited in banks beyond a certain threshold limit.

Published: 25th November 2016 03:43 AM  |   Last Updated: 25th November 2016 08:33 AM   |  A+A-


Indian currency of different denominations. |File Photo: Reuters

By Express News Service

NEW DELHI: The government may amend the Income Tax Act to levy about 60 per cent tax on unaccounted money deposited in banks beyond a certain threshold limit, sources claimed. The amendments were considered at a Cabinet meeting chaired by the Prime Minister late on Thursday evening.   The news comes amid reports of a whopping Rs 21,000 crore surge in deposits in Jan Dhan accounts across the country. Authorities suspect that the surge could be an attempt by black money hoarders to launder their unaccounted wealth by depositing the same in the accounts of poor people.

While there was no official briefing on what transpired in the Cabinet meeting, sources quoted by PTI claimed the government was keen on taxing all unaccounted money that how now found its way back into the system. The government plans to bring an amendment to the Income Tax Act during the current winter session of Parliament. According to the amendment a 60 per cent tax, equal to what foreign black money holders paid last year, would be levied on unaccounted deposits in banks. This is much higher than the 45 per cent tax that was imposed on black money disclosed under the one-time Income Disclosure Scheme that ended on September 30. “There were also talks of government imposing a limit on domestic gold holding, but it’s not clear if the proposal was discussed at the Cabinet meeting,” sources said.

The government, meanwhile, announced a slew of new measures and relaxations on the usage of old currency notes. Exchange of old notes for new ones was stopped with effect from Thursday midnight. The Finance Ministry claimed that it had observed a ‘declining trend’ in over-the-counter exchange of notes. “This will also encourage people who are still unbanked to open new accounts,” it said. The ministry also extended the deadline for use of old notes to pay key utility bills to December 15. However, it said that such transactions can be done only through old Rs 500 notes, meaning Rs 1,000 notes cannot be used or exchanged anymore and can only be deposited in bank accounts. Payment of government school and college fees, pre-paid mobiled top up (up to Rs 500 per top up) can also be done with old Rs 500 notes till December 15.

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