Lok Sabha on Tuesday passed Pradhan Mantri Garib Kalyan Yojana (PMGKY) 2016 without any debate or discussion. First introduced on Monday, the income disclosure scheme offers another opportunity to disclose black money on conditions of anonymity.

Under the scheme, if voluntarily disclosures are made before December 30, the bill directs a 50 percent tax on the unaccounted demonetised cash. Though people will still be allowed to deposit money in their accounts till April 1, 2017, a steeper tax of 85 percent and penalty will be levied.

Union Finance Minister Arun Jaitley on Tuesday said that the amendment bill is part of the ongoing crackdown that began with Prime Minister Narendra Modi's announcement on November 8 to fight the menace of black money and corruption.

"When Prime Minister Narendra Modi announced the demonetisation move, the intention was clearly to wipe out black money. The Bharatiya Janata Party government has always taken measures to curb the circulation of black money," Jaitley said in Lok Sabha.

"The government moved amendments in income tax law after it saw that a few people were still trying to convert black money into white post-demonetisation," he added.

Lok Sabha was adjourned for the day straight after PMGKY was passed.

The Taxation Laws (Second Amendment) Bill

Another provision of the scheme mandates that 25 percent of the amount will be locked down in interest-free Pradhan Mantri Garib Kalyan Deposit Scheme. Employing the use of carrot-and-stick approach, the amount voluntarily declared under PMGKY will not be included in the total income of the declarant for any assessment year. No set off is allowed under any head on this amount.

However, if tax sleuths discover any undeclared income during income tax searches, the individual will be charged an additional penalty of 30 percent apart from the regular tax on the money, provided that the individual being assessed admits to the undisclosed income and "substantiates" the manner in which the undisclosed income was derived. But in case of any non-compliance, the penalty would be raised to 60 percent, in addition to the tax required to be paid.

"There have been representations and suggestions from experts that instead of allowing people to find illegal ways of converting their black money into white again, the government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean," Jaitley was quoted saying on the matter by IANS.

Infographic tax law