New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits

An employee counts Indian rupee notes at a cash counter inside a bank in Agartala, December 31, 2010. REUTERS/Jayanta Dey/Files
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A disclosure scheme may finally be in place for those depositing unaccounted cash in banks under demonetisation. They will have to pay 50% tax and also forego the use of their money for four years.

Anyone not availing of this scheme and gets subsequently caught will face a higher penalty. This could be over 60%.

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The government will move an amendment to the Income Tax Act next week.

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The plan comes a day after the cabinet approved amendments to tax laws, clarifying the tax liability on deposits of cancelled Rs 500 and Rs 1,000 notes in bank accounts after the November 8 cutoff.

Also read – There is printing mistake in the new ₹500 notes, says RBI

The move came after banks were ordered to stop exchanging old Rs 500 and Rs 1,000 notes at their counters. But all exemptions — including purchases at petrol pumps and pharmacies along with a few new ones such as mobile phone recharges and school fees — will be available until December 15, the government said. However, only the old Rs 500 note can be used in these exempted categories, the government said in the first comprehensive review of India’s demonetisation exercise that also tightened som ..