Brief summary of new Taxation Laws to Tax undisclosed Income

CA Satbir Singh — Mon, 28 Nov 2016 23:43:38 +0000

FM tables The Taxation Laws (Second Amendment) Bill, 2016 in Lok Sabha on 28.11.2016 introducing stringent penalties and PM Garib Kalyan Deposit Scheme 2016. Important features includes:

Any income assessed u/s 68/69/69A/69/69C/69D (including share capital, unsecured loans, etc) to be taxed u/s 115BBE, which is to be increased from 30% to 60% plus 25% surcharge i.e., 75%
Penalty if tax u/s 115BBE not paid within the relevant previous year to be imposed @ 10%
Penalty in case of search cases (where source declared and other conditions are complied) to be increased from 10% to 30%
Penalty in case of search cases (other than above) to be increased from 10% – 30% to 60%
Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS) 2016 to be introduced.
Any amount declared in PMGKDS 2016 not to be included in total income of the declarant.
Tax to be paid @ 30% plus surcharge @ 33% and penalty @ 10% i.e. a total of 49.9% of the amount to be declared before making the declaration
25% of the undisclosed income to be deposited in PMGKDS 2016 with lock in period of 4 years with Nil interest

Overview of Amendments Proposed : Existing Provisions VS Proposed Provisions in Income Tax Act

PARTICULARS	EXISTING PROVISIONS	PROPOSED PROVISIONS

General provision for penalty	PENALTY (Section 270A) Under-reporting – @50% of tax Misreporting – @200% of tax (Under-reporting/ Misreporting income is normally difference between returned income and assessed income)	No changes proposed
Provisions for taxation & penalty of unexplained credit, investment, cash and other assets	TAX (Section 115BBE) Flat rate of tax @30% + surcharge + cess (No expense, deductions, set-off is allowed)	TAX (Section 115BBE) Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx. (No expense, deductions, set-off is allowed) PENALTY (Section 271AAC) If Assessing Officer determines income referred to in section 115BBE, penalty @10% of tax payable in addition to tax (including surcharge) of 75%.
Penalty for search seizure cases	Penalty (271AAB) (i) 10% of income, if admitted, returned and taxes are paid (ii) 20% of income, if not admitted but returned and taxes are paid (iii) 60% of income in any other case	Penalty (271AAB) (i) 30% of income, if admitted, returned and taxes are paid (ii) 60% of income in any other case
Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY)	New Taxation and InvestmentRegime	Undisclosed income in the form of cash & bank deposit can be declared: (A) Tax, Surcharge, Penalty payable Tax @30% of income declared Surcharge @33% of tax Penalty @10% of income declared Total @50% of income (approx.) (B) Deposit 25% of declared income to be deposited in interest free Deposit Scheme for four years.

Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana 2016

New Taxation Bill to tax undisclosed income introduced in Lok Sabha by India -PMGKY

new Taxation Laws to Tax undisclosed Income Archives - Tax Heal

Brief summary of new Taxation Laws to Tax undisclosed Income

Overview of Amendments Proposed : Existing Provisions VS Proposed Provisions in Income Tax Act