The Cabinet is preparing a disclosure scheme for unaccounted deposits stored with banks after the launch of demonetization. As per this scheme, people with unaccounted money who stored in banks can avail a disclosure oportunity by paying a 50% tax. Additionally there is a lock in period of four years for the deposits.
The new idea of taxing extra for the trapped unaccounted money gives more mileage for the government as it will give additional tax revenue. Besides, the second condition indicates that banks can utilize this deposit for four years. Payment of interest during this period is not mentioned as per the initial design.
If the account holder is not revealing the black income even after using this built-in disclosure scheme, there will be a high tax rate of 60% if black money nature is proved later. Government will soon amend the relevant Income Tax Act clauses to penalise the black money revealed under the demonetization drive.
The just concluded Income Disclosure Scheme (IDS) has brought out nearly Rs 60000 crores black money though the expectation was much bigger. Tax rate for the scheme was 45% including a penalty tax rate of 15%.