The finance ministry has proposed severe measures to penalise cash deposits of unexplained income.
In an informal briefing, a finance ministry official told reporters that voluntarily disclosed under-reported income for the year will be taxed at 50 percent.
Of the remaining amount, 25 percent will be locked in for a period of 4 years. The government intends to use the proceeds from the tax collected, excluding the states' share of tax for specified rural development projects, the official added. Effectively, only 25 percent of the deposit will be available for the assessee to use.
As for cash deposits that represent misreported income (income that evaded taxes), the official said they will be taxed at 60 percent and a 30 percent penalty will be levied after amendments to the Income Tax Act, 1961 or the current tax rate of 30 percent and 200 percent penalty would continue.
The amendments are likely to be tabled in Parliament next week.
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