Payments towards Tax, Penalty, Surcharge and Deposit under PMGKY 2016 in Old Demonetised Currency allowed till 30th December, 2016.

The Central Government has decided that up to 30.12.2016, the payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib KalyanYojana (PMGKY), can be made in Old Bank Notes of Rs. 500 and Rs.1,000 denomination issued by the RBI.

The Taxation and Investment Regime for Pradhan Mantri Garib KalyanYojana (PMGKY), 2016 has commenced on 17thDecember, 2016 and is open for declarations upto 31st March, 2017. The payment of tax, surcharge and penalty under the Scheme is to be made through challan ITNS- 287 and the deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme,2016. The notifications relating to PMGKY are available on the website www.incometaxindia.gov.in

Income Tax Department Identifies 67.54 lakh Potential Non-Filers for F.Y. 2014-15

The Non-filers Monitoring System (NMS) was rolled out for identification of non-filers with potential tax liabilities. Data analytics carried out by the Systems Directorate of Central Board of Direct Taxes (CBDT) identifies non-filers about whom specific information is available in the AIR, CIB and TDS/TCS databases.

The Income Tax Department has conducted the fifth cycle of data matching which has identified an additional 67.54 lakh potential non-filers who have carried out high value transactions in the financial year 2014-15 but did not file return of income for the relevant assessment year i.e. A.Y 2015-16. The information relating to the identified non-filers has been made available in the ‘Compliance Module’ on the e-filing portal of the Income Tax Department. The information will be visible only to the specific PAN holder when they log into the e-filing portal at https://incometaxindiaefiling.gov.in. The PAN holder will be able to respond electronically and retain a copy of the submitted response for record purpose.

While the Government urges all tax payers to disclose their true income and pay taxes accordingly, the Department would continue to pursue the non-filers vigorously till all the high potential non-filers are covered.

Government decides to reduce the existing rate of deemed profit under section 44AD of the Income Tax Act in respect of amounts/receipts through banking channel/digital means

Under the existing provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case of certain assesses (i.e. an individual, HUF or a partnership firm other than LLP) carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.

In order to achieve the Government’s mission of moving towards a less cash economy and to incentivise small traders / businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel / digital means for the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash.

Legislative amendment in this regard shall be carried out through the Finance Bill, 2017.

Amounts exceeding Rs.5000 in old notes can be deposited only once between now and 30th December, 2016

The deposits of old notes of Rs.500 and Rs.1000 denominations have been reviewed by the Government from time to time. Already more than five weeks have elapsed since the time of the announcement of the cancellation of the legal tender character of these notes. It is expected that, by now, most of the people would have deposited such old notes in their possession. Keeping this in view and to reduce the queues in the banks, it has now been decided that amounts exceeding Rs.5000 in old notes can be deposited only once between now and 30th December, 2016. The banks have been advised to conduct due diligence regarding the reasons for not depositing these notes earlier. Amounts of Rs.5000 or less may continue to be deposited with banks in the customer’s account, as at present. However, cumulative deposits exceeding Rs.5000 between 19th and 30th December, 2016 will be as per the procedures advised by RBI in respect of deposits exceeding Rs.5000 as stated above.

Further, an opportunity has been given to the public to make the payments towards tax, penalty, cess/surcharge and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 with the old bank notes of Rs.500 and Rs.1000 denomination upto 30th December, 2016.

A number of representations had been received from District Cooperative Central Banks (DCCBs) to allow them to deposit with their linked currency chests the old Rs.500 and Rs.1000 notes that had been collected by them between the 10th of November and 14th of November, 2016. An enabling notification to this effect has been issued. NABARD which supervises the DCCBs will conduct complete audit check of the Know Your Customer (KYC) documents of the individual customers who have deposited these notes or of the members of the Primary Agricultural Credit Society (PACS) who have deposited these notes. The details in this regard will be notified by RBI.

Clarification of Status of Political Parties under Income Tax Act, 1961

There have been some newspaper reports which seem to wrongly suggest that there cannot be any scrutiny of Income-tax returns of political parties registered with the Election Commission in the context of deposits of old currency notes. This inference seems to have been drawn because of the fact that the income of the political parties is exempt from Income - Tax under Section 13A. 

In this context, the following clarifications need to be kept in mind :

• The exemption from Income-Tax is given to only registered political parties subject to certain conditions, which are mentioned in Section 13A, which includes keeping and maintaining books of accounts and other documents as would enable the Assessing Officer to deduce its income therefrom;
• In respect of each voluntary contribution in excess of Rs. 20000, the political party will have to maintain a record of such contributions along with the name and address of such person who has made such contribution;
• The accounts of each such political party is to be audited by a Chartered Accountant; and
• The political party has to submit a report to the Election Commission about the donations received within a timeframe prescribed.

There are enough provisions in the Income Tax Act to scrutinise the accounts of the political parties and these political parties are also subject to other provisions of Income-Tax, including filing of return.

Statement by Finance Minister Shri Arun Jaitley

Following is the statement by Union Minister for Finance and Corporate Affairs Shri Arun Jaitley: 

"Political parties have not been granted any exemption post demonetisation and introduction of Taxation Laws (Second Amendment) Act, 2016 which came into force on 15th December, 2016. 

Income & Donations of political parties fall in the purview of Section 13A of the Income Tax Act 1961 & there is no change in its provisions. In this era of instant outrage, a 35 year old law is presented as a new law being passed by the NDA Government. 

I implore all journalist friends to be fully outraged against any step of the Government, if it is not against corruption. But in equal measure, I would also implore them to do adequate research before jumping the gun. 

Under Section 13A of IT Act 1961, Political parties have to submit audited accounts, income & expenditure details and balance sheets. 

Post demonetisation, no political party can accept donations in 500 and 1000 rupee notes since they were rendered illegal tenders. Any party doing so would be in violation of law. 

Just like anyone else, political parties can also deposit their cash held in the old currency in banks till the 30th of December provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to 8 November. 

If there is any discrepancy in the books or records of political parties, they are as liable to be questioned by the Income Tax authorities as is anyone else. They enjoy no immunity whatsoever. 

There is no question of sparing anyone, and the political class is no exception. Infact PM Modi is setting a new example of propriety in public life, by asking all MPs & MLAs of BJP to submit their bank account details post demonetization. We would like to urge the other parties to do the same and prove their intentions against corruption."

Income Tax Searches lead to Admission of Undisclosed Incomes of Rs. 2600 Crore since 8th November, 2016.

The Income Tax Department has continuously been carrying out investigations since the de-monetisation of Old High Denomination (OHD) currency announced by the Government on 8th November, 2016. While Searches have been carried out in 291 cases across the country, 295 cases have been covered by survey action. In addition to these, open enquiries have been effected in more than 3000 cases. Approximately Rs. 393 Crore including Rs. 316 Crore cash and Rs. 77 Crore worth of jewellery has been seized. Of the cash seizure, about Rs. 80 Crore is in new currency. As a result of these investigations, approximately Rs. 2600 Crore of undisclosed income has been admitted by the taxpayers.

The success of the Department in unearthing undisclosed incomes and detecting large scale malpractices is due to its focused enforcement actions based upon high quality data analytics under various categories thereby identifying and prioritizing high risk persons/groups. This, coupled with the professional manner of conducting the investigations in a swift and confidential manner, has helped the Department make an impact in a short time.