PRADHAN MANTRI GARIB KALYAN YOJANA

PRADHAN MANTRI GARIB
KALYAN YOJANA

Commencement
It came into force from the 17th day of December,
2016 and shall be valid till 31st day of March,
2017.
This Scheme shall be applicable to every declarant
under the “Taxation and Investment Regime for
Pradhan Mantri Garib Kalyan Yojana, 2016” .
The payment of Tax, Surcharge and Penalty under
the scheme is to be made through challan -ITNS-
287 and the deposits are to be made under the
Pradhan Mantri Garib Kalyan Deposit Scheme,
2016 .

Which Deposits can be Declared?
Any form of deposits maintained with a Bank or Post
Office like:-
Savings Account
Current Account
Recurring Deposit Account
Fixed Deposits
Senior Citizen Savings Scheme
Monthly Income Scheme
Jan-Dhan Yojana Account
Can be Declared under the PMGKY.

Procedure for Declaration under PMGKY
Firstly, Declarant has to fill Challan-ITNS-287
through which Taxes, Surcharge and Penalty, has to
be paid to the govt.
After payment of Taxes, Surcharge and Penalty,
minimum 25% of the Undisclosed Income has to be
deposited in the Bonds Ledger Account i.e. under
PMGKDS,2016 in Form II.
After above payments, declarant will have to fill
Form-1 along with the Two Attachments i.e. Proof
of Payment of Total Taxes and Proof of Deposit in
Pradhan Mantri Garib Kalyan Deposit Scheme, 2016.

Procedure for Declaration under PMGKY..
Declaration of income to be filled in
Form-1 specifying form of cash or
deposit made in an account
maintained with a specified entity,
under sub section (1) of section 199C.
The declaration shall be furnished to the
Principal Commissioner or the
Commissioner, as the case may be, notified
under sub-section (1) of section 199G:-
-Electronically under digital signature , or
-Through transmission of data electronically
under Electronic Verification Code, or
-In print form.

Procedure for Declaration under PMGKY..
The Principal Commissioner or The
Commissioner, as the case may be
shall issue a certificate in Form-2 to
the declarant within 30 days from the
end of the month in which a valid
declaration under sub-section (1) of
section 199C has been furnished.
If any person, having furnished a
declaration under sub-rule (2),
discovers any omission or any wrong
statement therein, he may furnish a
revised declaration on or before the
date notified for filing declaration
under sub section (1) of section
199C.

Forms
 Form I :- Certificate of Holding “PRADHAN MANTRI
GARIB KALYAN DEPOSIT SCHEME,2016”
 Form II:- Application Form for “PRADHAN MANTRI
 Form III:-Nomination
 Form IV:-Cancellation of Nomination
 Form V:-Form for Reporting Under “PRADHAN MANTRI
 Form 1:- Form of declaration under section 199C of the
Finance Act, 2016, in respect of the Taxation and
Investment Regime for “PRADHAN MANTRI GARIB
KALYAN YOJANA RULES, 2016”
 Form 2:- Certificate of declaration under section 199C of the
Finance Act, 2016, in respect of the Taxation and
Investment Regime for “PRADHAN MANTRI GARIB
KALYAN YOJANA RULES, 2016”

Declaration should be made with payment and
deposit proof
It is essential for the Declarant to file a Form-1
and then verify it according to the rules and
regulation prescribed by the government.
The declaration will also be submitted with
proper evidence i.e. Proof of Total Payment of
Taxes, Surcharge & Penalty And Proof of deposit
in Pradhan Mantri Garib Kalyan Deposit Scheme,
2016.
After such procedure, if one is found to have the
unaccounted money with them then Declarant
will be charged with higher tax.

Eligibility Of Deposits
The deposit under this scheme shall be made by
any person who intends to declare undisclosed
income under sub-section (1) of section 199C of
Income Tax Act, 1961 as specified in Chapter IXA
i.e. “Taxation and Investment Regime for Pradhan
Mantri Garib Kalyan Yojana, 2016” of The
Taxation Laws (Second Amendment) Act, 2016.

Effective Date Of Deposit
The effective date of opening of the “Bonds Ledger
Account” shall be the date of tender of cash or the
date of realisation of draft or cheque or through
electronic transfer.
Ques: What is a Bonds Ledger Account?
Ans: A BLA or Bond Ledger Account means
an account with RBI or an agency bank in which
the Government securities are held in a
dematerialized form to the credit of the holder.
The investor in this case receives a Certificate of
Holding or Certificate of Investment from
RBI/Agency Banks.

Form of the Deposits
The deposits shall be held at the credit of the
declarant in “Bonds Ledger Account” maintained
with the Reserve Bank of India.
A certificate of holding the deposits shall be issued
to declarant in Form I.
The Reserve Bank of India shall transfer the
deposit received under this scheme into the
designated Reserve Fund in the Public account of
the Government of India.

Applications
An application for the deposit under PMGKD scheme
is to be made in Form II clearly indicating the
Amount, Permanent Account Number, Bank Account
Details (for receiving redemption proceeds), and
Address of the declarant. If the declarant does not
hold a PAN, he shall apply for a PAN and provide the
details of such PAN application along with
acknowledgment number.
The application under above paragraph shall be
accompanied by an amount which shall not be less
than 25% of the undisclosed income to be declared in
the form of cash or draft or cheque or through
electronic transfer.

Subscription & Mode of Investment in the
Bonds Ledger Account
The deposits can be made at the Authorised Banks notified
by Government of India.
The deposits should be in multiples of Rupees one hundred
(100).
The deposit under sub-sec(1) of sec 199F by a declarant
shall not be less than 25% of the undisclosed income to be
declared under sub-sec(1) of section 199C of the act.
The entire deposit to be made under sub-sec(1) of sec 199F
under this scheme shall be made, in a single payment,
before filling declaration under sub sec(1) of sec199C in
Form-1.
The deposit shall be made in the form of cash or draft or
cheque or by electronic transfer and shall be drawn in
favour of the Authorised Bank accepting such deposit.

Authorised Banks
Application for the deposit in the form of Bonds Ledger
Account shall be received by any Banking Company to
which the Banking Regulation Act, 1949(10 of 1949) applies.
The authorised bank shall electronically furnish the details
of deposit made in Form V to the Department of Revenue,
Ministry of Finance, Government of India not later than
next working day to enable the Department to verify the
information of the deposit before accepting the declaration.
The authorised bank shall upload the details of deposit into
Reserve Bank of India’s core banking solution ‘e-kuber’.
The Reserve Bank of India and authorised bank shall
maintain the confidentiality of the data received in this
regard.

Effects of Valid Declaration
Where a valid declaration has been made then the
following consequences will follow:-
1) The amount of undisclosed income declared shall not be
included in the total income of the declarant under the
Income-Tax Act for any Assessment year.
2) A declarant under this scheme shall not be entitled, in
respect of undisclosed income or any amount of tax and
surcharge paid thereon, to re-open any assessment or re-
assessment made under the Income tax Act or Wealth Tax
Act,1957, or to claim any set off or relief in any appeal,
reference or other proceeding in relation to any such
assessment or re-assessment.
3) The contents of the declaration shall not be admissible in
evidence against the declarant for the purpose of any
proceeding under any Act other than the Acts on which
this scheme is not applicable.

Circumstances where Declaration shall be
Invalid
The declaration shall be void and shall be deemed never to
have been made where a declaration has been made by:-
a) Misrepresentation, or
b) Suppression of facts, or
c) Without payment of tax and surcharge, or
d) Penalty , or
e) Without depositing the requisite amount in the PMGKY
Deposit Scheme.
 And in such cases all the provisions of the Income Tax
Act, including penalties and prosecutions, shall apply
accordingly.
 If declaration shall be void then any tax and surcharge
paid under this scheme shall not be refundable.

Nomination
 A sole holder or a sole surviving holder of a Bonds Ledger Account, being
an individual, may nominate in Form III, one or more persons who shall
be entitled to the Bonds Ledger Account and the payment thereon in the
event of his death.
 Where any amount is payable to two or more nominees and either or any
of them dies before such payment becomes due, the title to the Bonds
Ledger Account shall vest in the surviving nominee or nominees and the
amount being due thereon shall be paid accordingly. In the event of the
nominee or nominees predeceasing the holder, the holder may make a
fresh nomination.
 A nomination made by a holder of Bonds Ledger Account may be varied
by a fresh nomination, or may be cancelled by giving notice in writing to
the Authorised Bank in Form IV.
 Every nomination and every cancellation or variation shall be registered
at the Reserve Bank of India through the authorised bank and shall be
effective from the date of such registration.
 If the nominee is a minor, the holder of Bonds Ledger Account may
appoint any person to receive the Bonds Ledger Account or the amount
due in the event of his death.

Transferability
Bonds Ledger Account is a Non-Transferable
Account and cannot be gifted or transferred to a
relative or a friend.
Except:-
The transferability of the Bonds Ledger Account
shall be limited to nominee or to the legal heir of
an individual holder, in the event of his death.

Repayment
The Bonds Ledger Account shall be repayable on
the expiration of Four years from the date of deposit
and redemption of such Bonds Ledger Account
before its maturity date shall not be allowed.
The redemption amount will be credited to the
bank account furnished by the person in the
application form.
In case there are changes in any details, such as
account no., email id etc. Then the investor must
intimate Reserve Bank of India, through the
authorized bank promptly.

Tax on
Income
Declared-
30%
Surcharge on
Tax @33%
i.e.10%
Penalty on
Income Declared-
10%
Amount
locked in for
4 Years- 25%
Remaining
Amount-
25%
If Income Declared Under PMGKY

Rs. 10 Lakhs Example
Undisclosed income in hand Rs. 10 lakh,
Tax @ 30% of income i.e. Rs. 300000,
Surcharge named as Pradhan Mantri Garib Kalyan
Cess @ 33% of Tax i.e. Rs. 99000,
Penalty @ 10% of income Rs. 100000,
Total amount payable (tax+ surcharge+ penalty) is Rs.
499000,
Total amount going into interest free deposit for 4
years is Rs. 250000,
Total amount of undisclosed income left in hand now
is Rs. 251000 or Rs. 250000,
Net amount declarant gets to keep after 4 years is Rs.
501000 or Rs. 5.01 lakhs.

If Income Not Declared Under PMGKY
Non declaration of undisclosed cash or deposit in accounts
under the scheme will render such undisclosed income
liable to tax, surcharge and cess totaling to 77.25% of such
income,if declared in the return of income.
In case the same is not shown in the return of income a
further penalty @ 10% of tax shall also be levied followed
by prosecution.
The provisions for levy of penalty for misreporting of
income @200% of Tax Payable under section 270Aof the
Income Tax Act have not been amended and shall continue
to apply with respect to cases falling under the said section.
The penalty provisions in respect of search & seizure cases
has also amended in the Taxation Laws (Second
Amendment) Act, 2016. If the income is admitted and taxes
are paid then penalty will be 30% of income. Otherwise a
penalty @60% of income shall be levied.

Example If Income Not Declared Under
PMGKY
If declared while filing Return of Income:-
Undisclosed income declared in the return Rs.10 lakh
Tax and surcharge @ 77.25% i.e. Rs.772500,
Net amount left in the hand is Rs. 227500.
If not declared while filing Return of Income and take
chance of being caught by department then:-
Tax and surcharge will be @ 77.25% i.e. Rs. 772500
Penalty @ 10% of Tax i.e.Rs.60000,
Total tax, surcharge & penalty will be Rs. 832500 i.e. 83.25% of
undisclosed income.
And further prosecution proceedings may be launched against
the assessee.
So, Net Amount left in hand is Rs. 167500.

FAQ’s
Q1. Who will provide other services to the declarant
after deposit in the scheme ?
Ans: The Banks through which the deposit into this
scheme was made, will provide other customer
services.
Q2. Which assets can be declared under this scheme ?
Ans: The declaration of undisclosed income under
this scheme can be only in the form of Cash or
deposits in an account maintained by the person with
Reserve Bank of India, any banking company or co-
operative bank to, Post office or any other entity
notified by Govt.

 Q3. Who can opt for this scheme and who cannot?
Ans: Any Individual, HUF, Firms, LLP, Society, Trust, Companies, AOP,
BOI, etc.
The scheme is not applicable on the following:
1) In respect of whom an order of Detention has been made under
COFEPSA ACT, 1974 and not set aside by competent court.
2) In relation to prosecution for any offence under chapter IX and XVII of
Indian Penal Code, The Narcotic Drugs and Psychotropic Substances
Act, 1985, The Unlawful Activities (Prevention) Act, 1967, The
Prevention of Corruption Act, 1988, The Prohibition of Benami
Transactions Act, 1988 and The Prevention Of Money laundering Act,
1992.
3) To any person notified under Sec. 3 of the Special Court (Trial of
Offences relating to Transaction in Securities) Act, 1992.
4) In relation to any undisclosed Foreign Income and Asset which is
chargeable to tax under the Black Money ( Undisclosed Foreign
Income and Assets) and Imposition of Tax Act, 2015.
FAQ’s…

Q4. To whom declaration to be made ?
Ans: To the Principal Commissioner or the Commissioner
notified in the Official Gazette for this purpose.
Q5. Can declaration of any Foreign assets, deposit or Foreign
bank deposit be made ?
Ans: NOT permitted as per the proposed legislation.
Q6. Can expenses be claimed from the undisclosed income ?
Ans: No deduction of any allowances/ expenditures set off of
any loss is allowed from the income under declaration.
FAQ’s…

Q7. When the Taxes and deposits under this Scheme required
to be paid ?
Ans: All the Taxes, penalty and the Deposits under this
Scheme are required to be paid before filing of Declaration
under this Scheme and proofs of payments to be filed with it.
Without these the declaration is void.
Q8. Can Tax/surcharge/penalty be refunded ?
Ans: NO-these are NON-Refundable
Q9. Are Declaration under this Scheme secret as under
IDS,2016 ?
Ans: NO
FAQ’s…

 Q 10. No Reopening of Assessment?
Ans: A declarant under this Scheme shall not be entitled, in respect of
undisclosed income referred to in section 199C or any amount of tax and
surcharge paid thereon, to re-open any assessment or reassessment made
under the Income-tax Act or the Wealth-tax Act, 1957, or to claim any
set-off or relief in any appeal, reference or other proceeding in relation to
any such assessment or reassessment.
 Q 11. Will any interest be paid on the deposit under the scheme?
Ans: The deposits under sub section (1) of section 199F shall not bear any
interest.
 Q 12. Can the BLA be gifted/transferred to a relative or friend on some
occasion?
Ans: No, the BLAs cannot be gifted/transferred to any relative or friend.
Transferability of the Bond Ledger Account shall be limited to nominee
or to the legal heir of an individual holder, only in the event of death of
the declarant.
FAQ’s…

Questions from Circular No.2 of 2017
 Q.1. Which deposits can be declared?
Ans: Any form of deposits maintained with a Bank or Post Office like:-
Savings Account
Current Account
Recurring Deposit Account
Fixed Deposits
Senior Citizen Savings Scheme
Monthly Income Scheme
Jan-Dhan Yojana Account
Can be Declared under the PMGKY.
 Q.2. Whether declaration under the scheme can be made in respect of income
which is represented in the form of investment in any asset like jewellery, stock
or immovable property?
Ans. No under the scheme, only income represented in the form of cash or
deposit in an account maintained with specified entity can be declared. The
scheme is hence not available for declaration of an income which is represented
in the form of assets like jewellery, stock or immovable property.

Q.3. In case a deposit is made by interbank transfer i.e.
transfers from one account to another account whether
such deposit can be declared under the Scheme ?
Ans: Yes, a declaration under the scheme can be filed in
respect of deposits made in an account maintained with a
specified entity by any mode such as cash, cheque, RTGS,
NEFT, or any electronic transfer system.
Q.4. Where a notice u/s 142(1), 143(2), 148, 153A, 153C of
the Income Tax act has been issued to a person for an
assessment year, will such person be eligible for making a
declaration under the scheme?
Ans: Yes, such person is eligible to avail the scheme subject
to fulfillment of conditions specified in the scheme.
Questions from Circular No.2 of 2017…

Q.5. Can a person against whom a search/ survey operation
has been initiated, file declaration under the scheme and
whether the cash seized during search operation can be
declared under the scheme?
Ans: Yes, a person against whom a search/ survey operation
has been initiated is eligible to file declaration under the
scheme in respect of undisclosed income represented in the
form of cash or deposit in an account maintained with
specified entity.
Q.6. Whether credit of advance tax paid, tax deducted at
source (TDS), tax collected at source (TCS), in respect of an
income declared under the scheme would be available?
Ans: No credit for advance tax paid, TDS or TCS shall be
allowed under the scheme.

 Q.7. Whether undisclosed income represented in the form of
deposits in foreign bank account is eligible for the scheme?
Ans: Clause (d) of sec 199-O of the scheme provides that the
scheme shall not apply in relation to any undisclosed foreign
income and assets which is chargeable to tax under the Black
Money (Undisclosed Foreign Income and Assets) and Imposition
of Tax Act, 2015. Hence, undisclosed income represented in the
form of deposits in foreign bank account is not eligible for the
scheme.
 Q.8. Can a person come under the scheme with respect to
deposit made in a bank account prior to the Financial Year 2016-
17?
Ans: A person can avail the scheme for any Assessment year
commencing on or before the 1st day of April,2017. Hence
deposits made in bank account prior to F.Y. 2016-17 can also be
declared under the scheme.

 Q.9. If a person does not declare undisclosed cash deposited in an
account between 01.04.2016 to 15.12.2016 under the scheme, then
whether such undisclosed deposit shall attract tax at the rate provided
in the Taxation Laws ( Second Amendment) Act, 2016?
Ans: The amended provisions of Sec. 115BBE of the Income Tax Act,
1961 shall apply to A.Y. 2017-18, relating to F.Y. 2016-17. Hence,
undisclosed deposits between 01.04.2016 to 15.12.2016 shall also attract
tax at the rate provided in the Taxation Laws ( Second Amendment)
Act, 2016.
 Q.10. Whether undisclosed income deposited/ repaid in an Overdraft
Account or Cash Credit Account or any loan account maintained with a
bank is eligible for being declared under the scheme?
Ans: Yes, the amount deposited or repaid against an Overdraft Account
or Cash Credit Account or any loan account maintained with a bank or
any specified entity is eligible for being declared under the scheme.

 Q.11. Whether the cash seized during a search and seizure action of the
Department and deposited in Public Deposit Account is allowed to be adjusted
against the payments required to be made under the scheme?
Ans: The adjustment of cash seized by the Department and Deposited in the
Public Deposit Account may be allowed to be adjusted for making payment of
tax, surcharge and penalty under the scheme on the request of the person from
whom the cash is seized. However, the said amount shall not be allowed to be
adjusted for making deposits under the Pradhan Mantri Garib Kalyan Deposit
Scheme.
 Q.12. Person ‘A’ made an advance in cash for procurement of goods (other than
immovable property) or services to person ‘B’. Person ‘B’ deposits this amount in
his bank account. Person ‘B’ subsequently returns this amount to Person ‘A’ in
cash or through digital means as the purpose for which advance was made did
not materialise. Can person ‘A’ declare this amount under the scheme? Whether
penalty u/s 271D or 271E shall be attracted in the case of person ‘B/?
Ans: Yes, person ‘A’ is eligible to declare the said amount under the scheme.
Since the advance was made for procurement of goods (other than immovable
property) or services, no penalty under sec. 271D or 271E of the act shall be
attracted in respect of the said transactions.

Recent Provisions for Taxation & Penalty on
Unexplained Credit, Investment, Cash and Other
Assets

S.No. Particulars
Declared under Pradhan Mantri
Garib Kalyan Yojana
Voluntary Declared under
Return Filing
1 Applicability
Undisclosed Income in the form of Cash or
deposits in an account maintained by the
person with following specified entity
All Unexplained Cash, Credit,
Investment, Cash and Other Assets
2 Tax @ 30% of Undisclosed Income
60% of Unexplained cash, credit,
Investment, Cash and Other Assets u/s
115 BBE
3 Surcharge @ 33% of Tax i.e. 9.9% 25% of Tax i.e. 15%
4 Cess @ N.A. 3% OF Tax & Surcharge i.e. 2.25%
5 Penalty@ 10% of Undisclosed Income No Penalty u/s 271AAC
6
Total
Tax+Surcharge+Cess+Penalty
49.90% 77.25%
7 Deposit
25% of declared income to be deposited in
Interest Free Deposit Scheme for 4 years
N.A.
8 Prosecution Proceedings No Prosecution Proceedings
No Prosecution Proceedings and no
penalty will be levied for under
reporting and mis-reporting of income
9 Penalty u/s 271AAB No Penalty levied No Penalty levied
10
Example
Undisclosed Income is Rs. 10 lakh,
So, Tax will be Rs. 3 lakh and Surcharge of
Rs. 99000 and Penalty will be Rs. 100000
Total is Rs. 499000 which is 49.9% of
undisclosed income.
Rs 2.5 lakh will be locked in for 4 years
without accruing any interest.
So, Tax will be Rs. 6 lakh and
Surcharge of Rs. 1.5 lakh, Cess of
Rs.22500 and Penalty will be NIL.
Total is Rs. 772500 which is 77.25% of
undisclosed income.
11 Total Liability 49.90% 77.25%

S.No. Particulars
Not Declared by Assessee in Return of Income But
Determined by AO
1 Applicability
Undisclosed Income in the form of Cash or deposits in an account
maintained by the person with following specified entity
2 Tax @ 60% of Undisclosed Income u/s 115 BBE
3 Surcharge @ 25% of Tax i.e. 15%
4 Cess @ 3% OF Tax & Surcharge i.e. 2.25%
5 Penalty@ 10% on tax i.e 6% of Undisclosed Income u/s 271AAC
6 Total Tax+Surcharge+Cess+Penalty 83.25%
7 Deposit N.A.
8 Prosecution Proceedings No Prosecution Proceedings
9 Penalty u/s 271AAB No Penalty levied
10
Example
So, Tax will be Rs. 6 lakh and Surcharge of Rs. 1.5 lakh, Cess of
Rs.22500 and Penalty will be Rs 60000.
Total is Rs. 832500 which is 83.25% of undisclosed income.
11 Total Liability 83.25%

S.No. Particulars Not declared but search & seizure held
1 Applicability All Unexplained Cash, Credit, Investment, Cash and Other Assets
2 Tax @ 60% of Undisclosed Income u/s 115 BBE
3 Surcharge @ 25% of Tax i.e. 15%
4 Cess @ 3% OF Tax & Surcharge i.e. 2.25%
5 Penalty@ No Penalty u/s 271AAC
6
Total
Tax+Surcharge+Cess+Penalty
77.25%
7 Deposit N.A.
8 Prosecution Proceedings Prosecution Proceedings will be there
9 Penalty u/s 271AAB Penalty LEVIED
Found during a Raid
Person Admits Tax Evasion At the
time of raid
Does Not Admits at the time of
Raid
Penalty @ 30% of Income will be
levied
Penalty @ 60% of Income will be
levied
10
Example
Rs.22500 and Penalty u/s 271AAB of
Rs. 3 lakh.
Total is Rs.1072500 which is 107.25%
of undisclosed income.
Rs.22500 and Penalty u/s 271AAB
of Rs. 6 lakh.
Total is Rs.1372500 which is
137.25% of undisclosed income.
11 Total Liability 107.25% 137.25%

An Effort By:
CA Kirti Fatehpuria
Ramanand Goyal & Co.
Chartered Accountants
+919602796993
mail@rngca.com
www.rngca.com

PRADHAN MANTRI GARIB KALYAN YOJANA

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