Union Government notified amendment to Pradhan Mantri Garib Kalyan Deposit Scheme

The Union Ministry of Finance notified an amendment to the Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016.

The notification was issued by the Union Government on 7 February 2017 in conusltation with the Reserve Bank of India (RBI).

The amendment allows declarants to make deposits on one or more occasions in the Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016. Before the amendment, the declarants were allowed to deposit in the scheme in only one installment.

About Pradhan Mantri Garib Kalyan Deposit Scheme

• For the first time, the scheme was proposed by the Union Government under the Taxation Laws (Second Amendment) Act, 2016.

• Consequently, the scheme was notified on 16 December 2016 and became operational on the next day.

• Under the scheme, taxpayers are required to declare their undisclosed income possessed in the form of cash or deposited in banks, post offices or RBI.

• The money thus collected will be used for executing irrigation and infrastructure projects, primary education, primary health, housing, toilets and livelihood.

• The deposit sum must not be less than 25 per cent of the declared undisclosed income.

• The deposit will not earn any interest and can be withdrawn only after four years from the date of deposit.

• The taxpayers who will declare their undisclosed wealth in denominations of banned Rs 1000 and Rs 500 currency notes under the scheme, will have to pay a tax at the rate of 30 per cent of the undisclosed income.

• The amount can be deposited in the authorized banks between 17 December 2016 and 31 March 2017.

Lok Sabha passes Taxation Laws (Second Amendment) Bill, 2016

About Taxation Laws (Second Amendment) Act, 2016

• The Lok Sabha on 29 November 2016 passed the Taxation Laws (Second Amendment) Bill, 2016 to amend the Income Tax Act, 1961 and Finance Act, 2016.

• The bill provides for three possible scenarios - voluntary declaration of black money, non-declaration of black money and black-money unearthed during a search and seizure - and accordingly provide for penalties on erring tax payers.