PMGKY 2016 Compliance Checklist and Steps

Compliance Checklist of  PMGKY 2016

Pradhan Mantri Garib Kalyan Yojana 2016,

Under the Taxation and Investment regime for Pradhan Mantri Garib Kalyan Yojana, a taxpayer can declare undisclosed income in the form of deposits and cash and is required to pay taxes, cess and penalty on such declared incomes.

Following are the Steps for Compliance under PMGKY 2016

1. Time to File Declarations under PMGKY 2016 :-  PMGKY Start Date 17.12.2016 and End Date 31.03.2017
2. PAN :- PAN is Compulsory to make declaration  under PMGKY 2016. If the declarant does not hold a PAN, he shall apply for a PAN and provide the details of such PAN application along with acknowledgement number.
3. Calculate undisclosed income :- Declarant needs to Calculate the undisclosed income in the form of deposits and cash as per  PMGKY 2016. [Read PMGKY 2016 Scheme as per Taxation Laws (Second Amendment) Act, 2016. ] and  Pradhan Mantri Garib Kalyan Yojana Rules 2016 [Read PMGKY Rules 2016 ]
4. Calculate Tax :– Calculate the tax to be Paid under PMGKY 2016. Flat rate of tax @30% of Income u/s 199D(1)  +        Penalty              @10% of income declared u/s 199E+ surcharge to be called Pradhan Mantri Garib Kalyan Cess @33 % of tax u/s 199D(2) = Total Tax @ 49.90%
5. Pay Tax : Declarant needs to pay Tax under PMGKY 2016 via Challan  No ITNS 287 . Click to Pay PMGKY Challan No ITNS 287
6. Deposit with Bank  :- Deposit 25% of Income declared under PMGKDS 2016 [Read Pradhan Mantri Garib Kalyan Deposit Scheme 2016 ]  in the form of Bond Ledger Account in Authorized Banks . Download Application form for Pradhan Mantri Garib Kalyan Deposit Scheme 2016  along with Nomination Form [Download nomination form ].  In case of cancellation/change in nomination, a separate form is to be filled and submitted to the authorized bank [Download Form for cancellation/change in nomination ]
7. File Form No 1 with Income Tax Department :– File Declaration under Form No 1 . [ Form 1 PMGKY 2016 -Download /Print ] .  All declarations under PMGKY shall be furnished to Principal Commissioner or the Commissioner, in any of the following modes:
   1.  Electronically on www.Incometaxindiaefiling.gov.in under digital signature ( Click How to File ), or
   2.  Electronically on https://www.incometaxindiaefiling.gov.in/ through EVC ( Click How to File ) , or
   3.  In physical Form [ Form 1 PMGKY 2016 -Download /Print ] . 

      Declarant needs to specify the following details in Form 1:

      a) Name, address and PAN;

      b) Status of declarant (whether resident, Non-resident, individual, HUF, Firm, etc.)

      c) Amount held in cash and bank deposits.

      d) Details of taxes paid before filing of declaration (i.e., date of deposit, Challan Number, etc.)

      e) Details of amount deposited in PM Garib Kalyan Deposit Scheme (i.e., minimum deposit amount is 25% of unaccounted income)

8. Revise Declaration, if required :- An option is also given to revise the declaration of Form No 1 , till March 31, 2017 if there is any omissions or wrong statement.
9. Take Certificate in Form 2 :- After filing of declaration, the Principal CIT or CIT shall issue a certification in Form-2 to the declarant within 30 days from the end of the month in which declaration has been furnished.
10. No Need to File it in Income tax Return :- The income declared under the Scheme shall not be included in the total income of the declarant under the Income-tax Act for any assessment year.
11. Not Admissible as Evidence :- The declarations made under the Scheme shall not be admissible as evidence under any Act (eg. Central Excise Act, Wealth-tax Act, Companies Act etc.). However, no immunity will be available under Criminal Acts mentioned in section 199-O of the Scheme

Question :What if undisclosed cash or deposit in accounts is not declared ?

Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totaling to 77.25% of such income .In case the same is not shown in the return of income a further penalty @10% of tax shall also be levied followed by prosecution.

Flat rate of tax @60% of Income  u/s Section 115BBE  + surcharge @ 15% of Income  ( i.e @25% of tax ) u/s Section 115BBE +10% Penalty on Tax u/s Section 271AAC + 3% Education Cess on Tax and Surcharge u/s u/s Section 115BBE = Effective Tax Rate 83.25%  (No expense, deductions, set-off is allowed).

It may be noted that the provisions for levy of penalty for misreporting of income @200% of tax payable under section 270A of the Income-tax Act have not been amended and shall continue to apply with respect to cases falling under the said section.

Question : What if undisclosed cash or deposit in accounts not declared under PMGKY 2016 but declared in Income tax Return to be filed  for Financial year 2016-17.

Non declaration of undisclosed cash or deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totaling to 77.25% of such income, if declared in the return of income.

Flat rate of tax @60% of Income u/s Section 115BBE + surcharge @ 15% of Income  ( i.e @25% of tax ) u/s Section 115BBE + 3% Education Cess on Tax and Surcharge u/s Section 115BBE = Total Tax 77.25%

(No expense, deductions, set-off is allowed)

Question : What is the benefit of declaraing undisclosed cash or deposit under PMGKY 2016