Use old notes to pay taxes, penalty under IDS: Modi govt

NEW DELHI: The government said the cancelled Rs 500 and Rs 1,000 notes can be used to make the payment towards tax, surcharge, penalty and deposit under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), the latest black money disclosure scheme.

This window is available till December 30, the last date for acceptance of old cancelled notes by scheduled banks.

The scheme commenced on December 17, 2016 and is open for declarations up to March 31, 2017.

Under the scheme a total tax — tax, surcharge and penalty — of 50% of the declaration in demonetised currency will have to be made. In addition, an amount equal to 25% of the declaration will have to be parked in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, for four years at zero interest.

Effectively, only 25% of the total undisclosed income will be available to the assesse for immediate use.

The declarations can be made in respect of undisclosed income in the form of cash or deposits in an account with bank or post office or specified entity.

This means that if a person has undisclosed income in bank accounts he can also avail of this scheme and use the demonetised currency to pay for tax and deposits by December 30.

The government had on November 8 demonetised Rs 500 and Rs 1,000 notes.

The scheme allows for deposit to be made in the form of cash or draft or cheque or by electronic transfer. The latest notification clears that payment when made in cash can also be made in demonetised currency.

The payment of tax, surcharge and penalty under the Scheme is to be made through challan ITNS- 287 and the deposits are to be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, a finance ministry statement said on Thursday.