Government tables amendments to Income Tax law

In a bid to curb the black money menace emanating out of unaccounted money, the government on Monday tabled amendments to the Income tax laws in the Parliament.

As per the amendments made to the Income Tax law, the declarant must pay 30 per cent tax on undisclosed income, along with 10 per cent penalty and 33 per cent surcharge.

The person declaring the unaccounted cash would have to deposit 25 per cent of the amount after paying tax and penalty. The surcharge, which will be at 33 percent, has been named Pradhan Mantri Garib Kalyan Cess.

The amount of money generated via penalty and surcharge will be used for economic and social economic projects like housing, irrigation, toilets, primary health, infra & education schemes.

Both the IT Act and Finance Bill will be amended. As per the current laws 30 per cent is levied on unaccountable income with no expense deductible.

The math can be explained as:

Suppose a person has Rs 100 unaccounted cash. 30 % Tax + 10 % penalty would be levied on that unaccounted Rs 100 which comes to be Rs 60 in hand. Of the Rs 40 which has been paid as tax and penalty, 33 per cent would be levied as surcharge on the quantum of tax that works out to be Rs 13.2, which is totalling off to Rs 53.2.

Lastly 25 per cent of (100-53.2= Rs 46.8) will be locked in for certain time and refunded thereafter.