Indian currency notes
A stack of the old Rs 500 notes is seen in the image above [Representational Image].Reuters

The government has devised a way for the tax cheats to disclose their unaccounted money and still get to keep a portion on it. The Union cabinet on Friday night approved an amendment to the Income Tax Act which would levy a 50 percent tax on disclosing unexplained bank deposits using the scrapped currency notes of Rs 500 and Rs 1000.

The rule is applicable only till December 30 with a four year lock-in period for the remaining unaccounted cash, meaning the hoarders can get half their money back after a period of four years if they disclose their illicit deposit.

The government however, has also said that there will be a higher penalty of levying 90 percent tax for those people who do not voluntarily disclose their unaccounted cash.

The amendment is the latest move which follows the government's decision to ban old higher currency notes of Rs 500 and Rs 1,000. The decision led to a sudden increase in cash deposits after the demonetisation move was announced on November 8. Jan Dhan accounts have been reported to have witnessed about Rs 20,000 crore being deposited so far.

According to the amendment, cash deposits made with the banned Rs 500 and Rs 1,000 notes above the amount originally declared to the Income Tax authorities may attract 50 percent tax. Reports said that the offender subsequently cannot withdraw the remaining half or 25 percent of the original deposit until four years after detection, acording to the Press Trust of India.

The government on November 8 had given a 50-day period for people to exchange or depositing their old Rs 55 and Rs 1,000 notes. The amendments approved by the government have already been sent to the President for his assent and will possibly be introduced in Parliament next week.

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