Govt has announced demonetisation of Rs 500 and Rs 1000 notes wef 09/11/2016 and asked the all the persons holding these notes to either exchange from Bank/post/RBI or deposit it Bank/Post office.Later govt has also announce exemption for few places where you can use old notes.
After the announcement , people has started queuing in front of Bank branches/ATM to deposit the cash & for withdrawal. Rs 500 and Rs 1000 notes are approximate 85 % of the total value of the currency issued by the RBI.Due to this the economic activity in India has slowed to a great extent.
The motive of the demonetisation is to remove black money from system , eliminate counterfeit notes , Hit terrorist funding , remove corruption , Reduce inflation and interest rate and to encourage digital payment etc. & most of the persons also agreed in our survey that these motive are achievable.
Further Govt has announced various measures so that only genuine persons may deposit their money in to bank and stated that t 200 % penalty will be levied on unaccounted money deposited in to the banks. Moreover announced penalty and confiscation also applied under benami property act.
Govt has also fixed a cut off of 2.50 lakh deposit after which amount deposited is required to be reported to income tax department . The above limit has been fixed at 12.50 lakh for current account.
However Black money holder , have started exploring the ways by which they can escape from tax authority which includes conversion of their cash/black money in to gold at higher rates on 08/11/2016 itself.
Many of them have deposited black money in the accounts of other persons.Total deposit of Jan-dhan-account has grown by 21000 crore after 09/11/2016 in just 15 days.
Many tax expert has suggested that 200 % penalty can not be imposed ,if a person deposit a unaccounted money in to bank and declare the same as current year income and pay maximum rate of tax i.e 30% as per present law of income tax act.
There is general consensus among tax experts that to scrutinize all deposited amount and then segregate the entries of the black money from such large amount and then asking explanation from persons deposited the amount without any harassment to genuine persons ,govt needs a large machinery and workforce.Further long legal battle/litigation can not be ruled out .Moreover it will also encourage corruption in income tax department or other enforcing agency.
Govt is monitoring the situation day by day , keeping in view the situation and circumstances ,and to avoid unnecessary litigation and to save genuine persons from harassment and to discourage corruption in income tax department and to collect tax at higher rate voluntarily , govt is planing a scheme of Voluntary disclosure scheme for unaccounted cash as under.
- Main Feature of New disclosure scheme (expected)
- 50 % Tax on unaccounted cash declared and deposited in to bank/post office under the scheme.
- Out of balance 50% ,25% amount can be withdrawn /used by person immediately.
- Balance 25 % can only be used by person after four years.
- If person have not opted the above scheme then tax @ 30%(maximum rate ) and penalty 200% shall be applicable.
The govt is planning to move an amendment in Income Tax act to facilitate the above changes.The above tax rate is higher than the effective tax rate of 45 % provided under income disclosure scheme(IDS) closed on 30.09.2016.
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