Mop-up target under New Tax Amendment Law very ambitious: Ketan Dalal, PwC India

In a chat with ET Now, Ketan Dalal, Regional Managing Partner (West), PwC India, says the whole intent is to make it punitive to incentivise people to declare all on or before 31st March.

Edited excerpts:



Let us talk a little bit more about this income declaration scheme, the Rs 2 lakh crore mop up target for the new declaration. Do you think it is a tad ambitious?

I do not know the numbers, but first of all when you say the new declaration scheme, what has happened is that one which was announced on the 26th of November -- a part of which was the Pradhan Mantri Garib Kalyan Yojana -- that appears to have been discussed and passed in the Lok Sabha yesterday and so in that sense the new declaration scheme is a reiteration.

Now coming to your question regarding this Rs 2 lakh crore mop up, the revenue secretary or the CBDT chairperson’s talk about that under the Pradhan Mantri Garib Kalyan Yojana means they are expecting something like Rs 4 lakh crore should be deposited before 31st March under that scheme.

I really do not know whether that target is ambitious. It sounds ambitious to me because of the rate of tax and I am not talking about the 25% deposit. As you know. the rate of tax is almost 50%; 30% is tax, 9.9% is surcharge and 10% is penalty. So if they are talking of Rs 2 lakh crore tax mop up, then the tax element of that would be Rs 1 lakh crore approximately. It sounds ambitious to me.
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What exactly do you make of this and what kind of a response are you expecting given that the levy on undisclosed income has been pegged at about 77% to 100 %?

I do not know what the 77% is but let me clarify we are talking of two completely different things; one is as we have discussed the Pradhan Mantri Garib Kalyan Yojana where the tax rate is 50% plus the deposit which is four-year deposit without interest of 25%.

The other one is what I would call the scheme for non-disclosing defaulters, which would be beyond 31st March and there the tax rate has been stated to be 60% plus 15% surcharge, total 75%. On top of that, there is a discretionary penalty of 6%, coming to 81%. So I do not know what this 77% is but certainly there is a 75% plus potential 6% tax after 31st March 2017 for those who do not disclose black money under the Pradhan Mantri scheme. This is pretty high and I think the whole intent is to make it punitive to incentivise people to declare all on or before 31st March.

I may just point out that the current scheme is for cash deposited whereas the other one is not just for cash but if you are caught with unexplained jewellery, if you have incurred unexplained expenditure, all of that that will apply so in that sense it is a) much more punitive and b) much more broader.