Undisclosed income holders will get another year to whiten their black money under the Finance Act 2021 that got go-ahead in the parliament today.
They will get the opportunity to legalise their black money without facing any question from any authority about their sources of income they will show in their tax returns.
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However, except for scope to invest the undeclared income to establish factories, owners of black money will have to pay higher tax and a 5 per cent penalty on the computed tax amount to legalise their wealth in the fiscal year 2021-22.
Undisclosed income holders who will establish new factories with fresh investment the next fiscal year will get the scope to legalise the invested money by paying 10 per cent tax.
Other than investment to build factories, persons with undeclared wealth will have to pay 25 per cent tax on the amount of undisclosed income they will show as investment in stocks, savings certificates, or as cash or kept in banks in the form of deposits or financial instruments in their tax returns.
In addition, they will have to pay 5 per cent penalty on the computed tax amount, according to the Finance Act 2021.
In case of legalisation of investment in apartments and land, people will require to pay specific amount of tax per square metre depending on the location of property.
The specific tax rate which has been effective this fiscal year will remain unchanged for the next fiscal year. Only 5 per cent penalty will be payable on computed tax, according to the Finance Act.
The fresh bid to help legalise black money without question comes amid lobby by various quarters after Finance Minister AHM Mustafa Kamal placed budget proposal for the fiscal year 2021-22.
In his budget proposal, Kamal did not seek to extend the amnesty for legalising black money without question for another year amid criticism from economists and civil society.
The special provision to whiten black money on payment of 10 per cent tax on cash, bank deposits, savings instruments and other financial schemes was given for the fiscal year 2020-21.
Also, the parliament relieved mobile financial service providers from the pressure of paying higher tax. The National Board of Revenue initially proposed to increase corporate income taxes on MFS providers to up to 40 per cent for the next fiscal year from present 32.5 per cent. The proposal was not passed in the parliament.
