Pradhan Mantri Garib Kalyan Yojana

When the Indian Prime Minister, Mr Narendra Modi, went on to announce the demonetization scheme on the 8^th of November in 2016, his target was all those people with loads of unaccounted/ undisclosed wealth, amounting to black money. Although majority of people did find out a way of disposing their black money, or getting it exchanged, there were also people who still had major undisclosed portions. To give one last chance to such people, the Prime Minister launched the Pradhan Mantri Garib Kalyan Yojana in December 2016.

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After the launch of Taxation Laws Amendment in early 2016, this was launched as an extension to the act. This involved providing a safe passage to all the black money holders to put their unaccounted wealth to better use. This involved giving black money holders a chance to deposit their undisclosed wealth. But this also involved multiple taxes and penalties, after which the depositor will be getting back only 50 percent, or lesser amount of total money deposited, that too after a period of four years. This will not include any kind of interest benefits on your deposited money. You will only get the leftover amount in the new currency.

The deposition of black money under the scheme has to be done in three steps:

1. Declaration – The first step of the scheme involves declaration of the undisclosed amount of money that the depositor has. This money will then be deposited in RBI or any other nationalized bank. The money will be available for withdrawal in the new currency, after a period of four years.

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2. Taxation and Penalties – When you disclose your unsourced income, you will have to pay 30% of the income as tax, another 33% as surcharge, and further 10% as penalty. Thus, approximately 50% of the money you deposit, you will have to forgo. Also, in addition to this, 25% of the remaining money will be used for the Pradhan Mantri Garib Kalyan Yojana, and the remaining will be available for withdrawal, with no added incentives or interest.

3. Submitting ID proofs – The declaration made will only be acceptable if it is made in the form of cash, and not any other valuable item like gold, or other valuables. Also, along with making a declaration, you will have to fill up a form and give proofs of your id. This might also involve signing an undertaking.

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The scheme was launched in December 2016, and valid upto 31^st March 2017 only. Those who are found holding large amounts of cash, after the scheme ends, will have to pay approximately 75 – 80% of their black money as penalty, and might also suffer prosecution. Thus for those who want to opt for an ultimate solution to the black money problem, this was probably the last chance.

We can come across multiple instances of raids by the income tax department almost everyday, which indicates that we still have people with undeclared wealth, and audacity to evade the system.