New Delhi: Even as the confusion over tax on provident fund withdrawal continues, Finance Minister Arun Jaitley on Wednesday justified the move to bring in the taxation proposal in the Union Budget 2016-17. While claiming the proposal will encourage pension savings, Jaitley also said that there is a very large segment of tax defaulters in the country.
“There is a very large unidentified segment which should have been paying but is not doing so, or not paying all taxes," said Jaitley.
The Finance Minister made it clear that the Narendra Modi government's aim is to create an insured India and presumptive taxes will benefit the small and medium taxpayers.
In his post-Budget 2016-17 interaction with industry chambers, the Finance Minister pointed that the revenue department is doing an important job to make sure that people comply.
"First emphasis in the first year was to connect people to bank accounts. Thereafter we said, our intention is to make India a pensioned and insured society. We've been systematically announcing reforms which help the small taxpayer. This whole idea of presumptive taxation, both in procedure and in quantum, helps the small and medium taxpayer," he said.
He also referred to the compliance window offered to black money holders, saying the limited period window to come clean is not an amnesty scheme. He pointed that disclosures will be charged at 45% as against the normal rate of 30%.
"In amnesty (scheme), you just pay tax and get away with it," he said.
Those with undisclosed income and assets are being provided a four-month window beginning June 1 to declare their wealth, pay normal tax rate of 30 per cent plus 15 per cent in penalty and surcharge and escape prosecution.
"(For) incomes which have escaped assessment, we have opened a compliance window. You pay higher (tax). It is not an amnesty scheme because you have to pay 50 per cent more than normal tax... And you have to pay it at current values, not at some old assumed value," he said.
The total tax and penalty for domestic black money holders is less than 60 per cent that the government had levied on foreign unaccounted asset holders in 2015.
A total of Rs 4,147 crore of undisclosed wealth was declared during the 90-day foreign black money compliance window that ended September 30, 2015. At 60 per cent (30 per cent tax and 30 per cent penalty), the government got a net tax of Rs 2,500 crore from the declarations.
The government had raised Rs 10,000 crore through the last domestic black money amnesty scheme in 1997.
(With PTI Inputs)
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