Thursday, December 1, 2016

Media reports: Proposal to tax demonetized notes at 60%! Whether legally sound?

There are news reports in media saying that Union Cabinet approved a proposal to amend section 270A of the Income-Tax Act,1961 to provide that unaccounted cash deposited in bank account during the demonetization period(09-11-2016 to 30-12-2016) would be taxed at 50% if voluntarily disclosed in income-tax return. The amounts so deposited and disclosed will have lock-in-period of 4 years.

If not so disclosed and the same is detected by the Income-Tax department, the amounts would attract 60% tax and penalty. There is no Bill or Ordinance or Press Release or CBDT Circular to this effect So to give credence to these news reports in planning one’s tax affairs may be risky. Secondly, assuming the proposal to be true, whether it is a legally and morally sound proposal?

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