INTRODUCTION

Indian Prime Minister Narendra Modi has introduced a new scheme in December 2016, which is designed to encourage Indian citizens to declare their undeclared income and pay taxes. The Pradhan Mantri Garib Kalyan Yojana (PMGKY) was launched as a follow-up to the Income Declaration Scheme. It had been launched earlier that year. The program, which is part of the Taxation Laws (Second Amendment) Act of 2016, allows people to register unaccounted cash by paying a fine of 50% of the concealed revenue. A further 25% of the gain is paid in the scheme. It can be refunded without interest within four years.

FEATURES OF PMGKY

The salient features of the Pradhan Mantri Garib Kalyan Yojana are as follows:

  1. Indian citizens who declare their undisclosed income, may be entitled to a reduction in tax and penalty at the rate of 50% of the undisclosed income.
  2. Indian citizens who disclose their undisclosed income may, on making payment of an amount equal to 25% (of such undisclosed income) in the form of interest-free deposit, be entitled to full or partial remission, at the discretion of the Adjudicating Authority
  3. Indian citizens who declare their undisclosed income may not be prosecuted under Income Tax Act nor can they be arrested.
  4. Indian citizens who declare their undisclosed income shall not be subjected to any civil or criminal proceedings under the Income taxes act or Wealth-tax Act or Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Indian citizens eligible for Pradhan Mantri Garib Kalyan Yojana cannot be held liable to pay a penalty under section 115V of the Income-tax act nor can they be prosecuted for the offense punishable under Section 276C of the Indian Penal Code
  5. Indian citizens who declare their undisclosed income during the period from 50th Day on 1st December 2016 to 31st March 2017 shall not face prosecution under Benami Transaction (Prohibition) Act, 2016.
  6. All declarations of undisclosed foreign assets/ income made during the window period will remain confidential. The authorities will receive only information about assets and not about individual cases. Thus, the confidentiality of individuals’ information is protected.
  7. Indian citizens eligible for PMGKY are required to file their declarations between 1st December 2016 and 31st March 2017. Indian citizens who declare their undisclosed income between this period are exempt from the mandatory 30% tax on capital gains arising from assets transferred by way of gift or inheritance or distributed by way of bonus/esops/ profit sharing. Indian citizens declaring undisclosed income under PMGKY will not be liable to pay any penalty under section 271(1)(c) of the Income Tax Act.

OBJECTIVES OF PMGKY

  • PMGKY’s main objective is to remove anonymity from the Indian economy. The Indian government has also been able to address the issue of Black Money in society by running this program. Furthermore, the Indian government has been able to recuperate OF PMGKY – Pradhan Mantri Garib Kalyan Yojana taxes that were owed by Indian nationals.
  • Pradhan Mantri Garib Kalyan Yojana was launched in December 2016 and it is part of the Taxation Laws (Second Amendment) Act. It allows Indian nationals to register their unaccounted cash with a fine of 50% outlay for the concealment. This means that Indian nationals can pay 25% of their total concealed income as a fee with an additional 25% paid upon refund within 4 years.
  • The Indian government has made it mandatory to deposit all such unaccounted cash acquired before 30th November 2016, if it is disclosed within PMGKY. They do not need to pay any interest for this fee and the Indian nationals will not be prosecuted by law.
  • The Indian government also decided that an Indian national can declare undisclosed income (Black Money) at a certain rate and they may not be investigated by law if their income does not exceed Rs 2 Crore per year or Rs. 4 Crores in total during the last 7 years preceding the date of submission of declaration under PMGKY provided that such person also holds assets outside India as specified.
  • This implies that Indian nationals who have earned such amounts through illegal means but are now trying to be honest for tax purposes can do so without being punished. Indian nationals are also allowed to declare undisclosed income of their spouse or minor children under this scheme.
  • The Indian government took this step after they realized that Indian citizens had accumulated huge amounts of Black Money over the years by evading taxes and laundering money acquired through illegal means. This move was designed to bring Indian citizens back to an honest tax-paying state.
  • Furthermore, Indian citizens would now be able to pay appropriate taxes on their undeclared earnings which were previously laundered illegally thus creating an open economy with low corruption levels; nonetheless, there were plenty of loopholes present in the system that gave rise to black Indian money again due to fake companies and bribery within the Indian government which is why Indian citizens are still hesitant to declare their Black Money.
  • Indian authorities also realized that Indian citizens were bribing Indian government officials in order to evade taxes and they have taken steps to penalize the bribery factor as well by imposing a penalty of 300% of tax on Indian nationals who bribe the Indian government officials for this purpose.
  • Furthermore, Indian government officials must provide an income declaration form every year which discloses all sources of their income so as to ensure transparency within the Indian Government.
  • In addition, it is now mandatory for Indian banks to keep records of Indian nationals who have deposited cash above Rs 10 Lacs per person at one time as well as non-cash deposits made by an Indian national during 2016- with a value exceeding Rs 5 Lacs throughout 2017. Indian authorities have made it mandatory to submit regular tax returns if Indian citizens possess assets worth more than Rs 10 Lacs outside India or receive more than Rs 1 Lacs per financial year in foreign income.
  • Indian Banks are also required to file a Suspicious Transaction Report (STR) on their account holders if the balance exceeds INR 2 Crores at any point in time, which is designed to help Indian law enforcement agencies crack down on Indian nationals who own illegal assets and make them subject to legal action.

HOW TO APPLY FOR PMGKY?

You can apply for PM Garib Kalyan Yojana 2021 by:

  1. Creating a new E-file with the Indian Tax Department and paying Rs.2,000 as a fee
  2. Opening an Indian Bank Account from which you can deposit Indian Rupees
  3. Linking your Indian Income Tax Number with Indian Permanent Account Number (PAN)
  4. Enrolling Indian Tax Department’s Indian Aadhar Card for Indian Direct Benefit Transfer (DBT) Scheme
  5. Applying online for Indian Income Tax Return on Indian GOV Portal.
  6. Closing your Indian Bank Account and Renouncing Indian Passport
  7. Asking some other way to deposit Indian Black Money into Indian Banks directly or by converting it into some other form of property outside India like property in Dubai, property in Europe, property in America, etc.
  8. Making up your mind about which is the best place to invest nearshore or offshore with low tax rate countries where you can save more taxes legally

There are two ways to make payments under PMGKY 2016: Cash Payment and Digital Payment.

Cash Payment

  • Fill Indian Income Tax E-form by uploading Indian PAN details to the Indian Tax Department’s Indian Website.
  • Pay Rs.10,000 Indian Rupees in Indian Bank using Indian Debit Card, Indian Credit Card, or Indian Net Banking Account
  • Print out the duly filled up Indian Income Tax Return E-Form with all your personal details including your Indian Aadhar Number which you have shared with the Indian Government for DBT Scheme. Once the form is printed, submit it to any of the authorized centers of the Indian Income Tax Department near your place. Here applicant will be given a receipt number and an acknowledgment cum cheque or pay order number after submitting his/her application along with fees payment proof in cash at Indian Bank.
  • Indian Income Tax Department will verify your Indian PAN, Indian Aadhar, and Indian Identity Card number in order to confirm that you are an Indian national or resident individual fully eligible to avail benefits of the PMGKY Scheme 2016. Once your application is verified by the Indian Income Tax department it will be uploaded on the Indian Government’s Indian website within 15 days from the date of submission by the applicant at an authorized center nearby his/her place.
  • Indian Revenue Department will send an SMS & Email alert to your mentioned Mobile number & E-mail id after uploading the application on the Indian government’s website along with a link which you can use to login into the Indian Income Tax Department Portal for tracking the status of your submitted detailed tax return forms online.
  • Fill Indian Income Tax E-form by uploading Indian PAN details to the Indian Tax Department’s Indian Website.
  • Pay Rs.10,000 Indian Rupees in Indian Bank using Indian Debit Card, Indian Credit Card, or Indian Net Banking Account
  • Print out the duly filled up Indian Income Tax Return E-Form with all your personal details including your Indian Aadhar Number which you have shared with the Indian Government for DBT Scheme. Once the form is printed, submit it to any of the authorized centers of the Indian Income Tax Department near your place. Here applicant will be given a receipt number and an acknowledgment cum cheque or pay order number after submitting his/her application along with fees payment proof in cash at Indian Bank.
  • Indian Income Tax Department will verify your Indian PAN, Indian Aadhar, and Indian Identity Card number in order to confirm that you are an Indian national or resident individual fully eligible to avail benefits of the PMGKY Scheme 2016. Once your application is verified by the Indian Income Tax department it will be uploaded on the Indian Government’s Indian website within 15 days from the date of submission by the applicant at an authorized center nearby his/her place.
  • Indian Revenue Department will send an SMS & Email alert to your mentioned Mobile number & E-mail id after uploading the application on the Indian government’s website along with a link which you can use to login into the Indian Income Tax Department Portal for tracking the status of your submitted detailed tax return forms online.

Digital Payment

  • Download Indian e-filing software from the Indian Income Tax Department website and signup for online access to your Indian ITR via an Indian net banking account.
  • After Step 1 above is completed successfully, Proceed further to complete Steps 3 & 4 under the cash payment method and upload your mandatory documents such as Original Indian Aadhar Card copy/ Permanent Account Number (PAN) card / Indian Identity Card /Voter ID / Passport, etc., supported Indian Identity proof documents for an Indian citizen to receive Indian black money.
  • Indian Income Tax Department will process your Indian income tax return and Indian e-refund request electronically online within 7 days from the date of registration at authorized Indian net banking center and Indian government website and issue Indian bank payment instructions so as to deposit Indian black money/ e-Refund in your Indian bank account within 5 days from the date of verification by verifying all your income tax papers submitted by you without any delay or hassle whatsoever,
  • Indian Bank will transfer Indian black money/e-Refund into your receiving bank account within 2-3 working days after receiving Indian payment advice electronically sent by the Indian Income Tax department / Central Processing Centre (CPC) at Bangalore Indian Income Tax Department,

ELIGIBILITY          

In order to be eligible for the PMGKY Scheme, Indian citizens must have a residential status as Indian as of November 8th, 2016. In addition, Indian citizens must also have had an income of R50,000 or more in the financial year 2015-16. They have to meet any of the following requirements: Indian citizens declare undisclosed income Indian citizens declare undisclosed foreign assets Indian citizens have unexplained foreign assets Indian citizens are unable to explain the source of funds used to buy their assets Indian citizens hold, transfer or receive unaccounted cash Indian citizens are party to a transaction involving unaccounted cash

Please note that the Indian citizen is the only one who needs to be mentioned.

Non-resident Indians (NRIs) cannot participate in this scheme. However, it should be noted that NRIs can participate in other black money amnesty schemes like the Income Declaration Scheme (IDS) and Foreign Black Money (Undisclosed Foreign Income & Assets), and Imposition of Tax Act, 2015. They must fulfill any of the following requirements: Non-resident Indians disclose undisclosed foreign income & assets Indian citizens are party to a transaction involving undisclosed foreign income & asset Indian citizens conceal an Indian or foreign asset Indian citizens have entered into any transaction for the transfer, otherwise than in accordance with the provisions of any law, of property situated in India.

The Indian status can be proved by providing valid documents like the Aadhaar number, PAN card number, etc. Also, only Indian citizens will need to disclose their declarations. This means that NRIs cannot participate in this scheme at all.

This paragraph is basically explaining what people should do if they are eligible to participate in this scheme. It requires one to pay a 50% fine on the concealed income through authorized banks and financial institutions. One should keep ready all original records associated with the concealed income like sales, purchase, tax deducted at source receipts, etc. This paragraph is important to help the Indian citizen understand what should be done in order to participate in this scheme.

DOCUMENTS

The Indian government has encouraged people to come forward and declare their unaccounted money. It has, therefore, created the Pradhan Mantri Garib Kalyan Yojana in order to reward those that have declared their unaccounted money. You can apply for the PMGKY by submitting a few documents. They include:

  • A copy of the PAN card
  • Income tax return form from a previous year
  • Proof of bank balance on December 31, 2016
  • Certificate from a senior Indian cricketer or sportsperson
  • Letter from Indian High Commissioner or Indian Ambassador stating the applicant made the disclosures under this scheme
  • ID proof of Indian origin
  • Overseas travel document as proof of Indian origin
  • Indian passport
  • Indian driving license.

The Indian government has made it clear that black money or unaccounted income will attract a fine of 77.25%, which is the highest ever in Indian history. The person, however, can submit all black money declared to PMGKY and avoid having to pay the penalty. They could even be rewarded with an additional 25%. This scheme was launched by Prime Minister Narendra Modi on December 17th, 2016, and would run until March 31st, 2017. Once this deadline expires, anyone caught with undisclosed income will have to face prosecution and punishment as per Section 276C and 277 of the Indian Penal Code (IPC).

Wholesome Benefits of the Scheme

  • Under this plan, five kilograms of free wheat is given to 80 crore individuals, alongside one kilogram of chana per family.
  • Since the uncovering of the plan in 2020, Rs.50,000 crore has been spent on giving work freedoms to poor people.
  • Maintenance cleaners, ward young men, attendants, ASHA laborers, paramedics, experts, specialists, trained professionals, and other wellbeing-related laborers would be given inclusion of Rs. 50 lakhs. Around 22 lakh wellbeing laborers can be covered under this component.
  • 2/3 of the populace will be covered under the plan, which is 80 crore individuals.
  • 20.40 crore PMGKY ladies account-holders would be given an additional an of Rs. 500 every month.
  • Under this Yojana eight crore helpless families will be provided with gas chambers liberated from cost.
  • The workers that acquire underneath Rs. 15000 for a month in organizations and have under 100 laborers will be paid 24% of their month-to-month compensation into their opportune asset accounts.
  • Three crore helpless widows and individuals in the Divyang classification will be furnished with Rs. 1000 for a very long time.

Benefits of PMGKY for Different Sections

  • For Wage Workers

The pay laborers who acquire underneath the measure of 15,000 for a month in a business and have under 100 representatives will be paid 24% of their month-to-month compensation into their Provident Funds represent three months from March 2020.

  • For Farmers

More than eight crore ranchers are said to benefit under the plan with direct money moves. A portion of Rs.2000 is expressed to be shipped off these ranchers in the principal seven-day stretch of April.

  • For Women

The ladies of self-improvement gatherings under the Deen Dayal Yojana who were prior qualified for comparable advances up to Rs.10 Lakhs will be apportioned with an insurance-free credit of Rs.20 Lakh. An aggregate of 20 crore ladies holding Jan-Dhan Yojana records will get an installment of Rs. 500 for the following three months from the dispatch of the arrangement.

  • For MGNREGA Workers

Through this arrangement, the wages of MGNREGA representatives were chosen to be expanded by Rs.2000 per specialist. It ultimately helped five crores of Indian families.

  • For Organized Sectors

The Union money serves likewise reported a climb in PF and as far as possible for the coordinated area. The plan additionally presented a commitment to the business and the worker who have under 100 representatives, where 90% of them acquire lesser than ₹15,000 each month, the public authority would pay their EPF for quite a long time.

  • For Construction Workers

The yojana gave an asset of ₹31,000 crores to help 3.5 crores, enlisted laborers, secure them against monetary disturbances.

How does the Indian PMGKY work?

The Indian PMGKY will allow interested parties to declare their undisclosed assets by paying a cumulative tax amounting to 50% of the declared value for three years and hold on to 25% of it for four years. The Indian Government will also provide incentives as immunity from prosecution and give Indian residents passport prohibition. Indian nationals who are not Indian residents will have to pay a cumulative tax of 30% that is applicable on their undisclosed assets for three years and hold on to 15% of it for four years. Indian citizens under the Indian Pradhan Mantri Garib Kalyan Yojana will be given additional incentives such as zero-rating, which applies to sale or purchase transactions by Indian citizens for at least 4 years, 5-year lock-in period with no capital gains tax, immunity from prosecution, and can also apply to get Indian citizenship after 1 year.

The Indian PMGKY has its own set of eligibility criteria that individuals must meet before they can declare their undisclosed assets. Individuals must first show proof that they have at least Rs 2.5 lakhs/year income for Indian residents and proof that they have a minimum Rs.250,000/year income for Indian nationals or its equivalent in Indian rupees.

There are also cases where specific individuals cannot apply through the Indian Pradhan Mantri Garib Kalyan Yojana such as Indian citizens who have been convicted by a court of law, delinquent taxpayers, and those who have been prosecuted under the Prevention of Money Laundering Act, 2002. Indian residents will be penalized if they do not take up their applications before 30th June 2017 whereas Indian nationals will have until September 30th, 2017 to file their declarations.

Mr. Modi announced during his 2016 Independence Day Address that “the black money being deposited in banks after demonetization is the money of the people has been looted by some unscrupulous persons. The Banks will fail if they do not get the money deposited into accounts.” Indian citizens are therefore encouraged to join the Indian PMGKY in order to help recover some of this looted Indian money which is currently kept abroad by Indian nationals or Indian residents who have kept it there illegally.

CONCLUSION

Indian Prime Minister Narendra Modi’s Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) is a program that allows Indian citizens to register unaccounted cash by paying a fine of 50% of the concealed revenue. A further 25% of the gain is paid in the scheme. It can be refunded without interest within four years. PMGKY follows up on Income Declaration Scheme and was launched as part of Taxation Laws Amendment Act, 2016. The Indian government has been trying to reduce black money since it came into power in 2014 because these funds are not only illegal but also affect the Indian economy adversely with reduced tax revenues etc.

You should also read this: Senior Citizen Savings Scheme (SCSS)

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