Income Tax

No 200 percent Penalty if income declared us 115BBE and 75% of tax and surcharge is paid as per Taxation Laws 2nd Amendment Bill 2016

No 200 percent Penalty if income declared us 115BBE and 75% of tax and surcharge is paid before the end of the previous year as per post demonetization amendments in Income Tax Penal Provisions.

Finance Minister has today introduced Taxation Laws (Second Amendment) Bill 2016 in Lok Sabha for introducing several amendments in penalties imposable under Income Tax Act, 1961 regarding mis-reporting or under reporting of income post demonetisation /withdrawal of Rs. 500/- and Rs. 1000/- bank notes. Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) has also been introduced giving one more opportunity to declare unaccounted-black money.

Strangely enough, the Modi Government which introduced IDS-2016 and subsequently started demonetisation with huge talks of not sparing anyone found in possession of black money, has chosen to give a safe passage to black money hoarders. Perhaps we all remember, PM Modi had categorically and emotionally stated that such money is used for terrorism and anti national activities. Now suddenly, by providing a safe passage as above, it is a cruel joke with those farmers, labourers and common people who have suffered irreparably due to demonetisation and even died in queues and even today after 20 days, still not being able to draw their hard earned money.

Amendment to section 115BBE:
Section 115BBE has been amended to provide for the tax rate of 60% on income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139 by the assessee.

Relief from penal Provisions:
If income is declared u/s 115BBE and taxes are paid before the end of the relevant previous year (i.e., 31-03-2017 for FY 2016-17)

  • No penalty for mis-reporting or under-reporing u/s 270A @ 50% or 200% shall be imposed on such cases.  (sub-section (2) of section 271AAC)
  • No penalty u/s 271AAC @ 10% to be imposed (proviso to sub-section (1) of section 271AAC)

Tax and penalty incidence may be pegged at 75% of the income declared as under:

Income declared as Unexplained Money/investments/expenditure  etc.
As per amendments to section 115BBE, if the income is declared u/s 68, 69, 69A, 69A , 69B or 69C of the Income Tax Act, 1961 and included by the assessee in the return of income furnished under section 139 and tax has been fully paid @60% u/s 115BE +surcharge @ 25%, no penalty u/s 270A or 271AAC is imposable

Example:
Declared income = Rs. 1000000/- lakhs

Sl. No. Tax to be paid  Amount (Rs.)
1 Income Tax u/s 115BBE @ 60% 600000
2 Surcharge @ 25% of tax 150000
Total Tax (No Penalty) = 75% of Income 750000

Download The taxation Laws (Second Amendment) Bill 2016 as introduced in Lok Sabha- Click Here >>

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