Section 115BBE

Whether Amendments Made under Income Tax Act after Demonetization (15 December 2016) are for the period of demonetization only?

Demonetization was the most drastic step in the history of India. It had several effects in different areas The one such area is Income Tax Act. More particularly with regard to section 115BBE of the Income Tax Act-1961.

Section 115BBE – What Does It mean?

Section 115BBE was introduce by finance Act 2013 to tax the incomes.  Which is include in total income of assessee  under section 68, section 69, section 69A, section 69B, section 69C or section 69D of Income Tax Act.  No deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing income under this section.

Earlier Provision

• Where the total income of an assessee—

includes any income referred to in section 68, section 69, section 69A, section 69B, section  69C or section 69D will be taxable at flat rate of 30% plus  applicable Surcharge and Education Cess without providing deduction under any other provision under the act.

Amendment by Taxation Laws (SECOND AMENDMENT) Act,2016

 

• Where the total income of an assessee—

(a)  includes any 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;

                                                             or

(b) determined by the Assessing Officer includes any income referred to in                                                                                                                                             section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a).

 

The income-tax payable shall be the aggregate of—

1) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of 60%; and

2) the amount of income-tax with which the assessee would have been chargeable had his total income been reduce by the amount of income referr to in clause (i).

Penalty under section 271AAC

The Assessing Officer shall, notwithstanding anything contained in this Act, direct that, in a case where the income determined includes any income referred to in section 68, section69, section 69A, section 69B, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at the rate of ten percent of the tax payable under clause (i) of sub-section (1) of Section 115BBE :

Provide that no penalty shall be levied in respect of income referr to in section 68. Section 69, section 69A, section 69B, section 69C or section 69D to the extent. Such income has been include by the assessee. In the return of income furnish under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 115BBE has been pay on or before the end of the relevant previous year.

Conclusion :

Earlier tax payable on such income was at flat rate of 30% and now it is at flat rate of 60% and penalty is also there at rate of 10% on tax payable under section 115BBE. There is no specification in Act that this amendment is for the purpose of demonetization only. It is effective from Assessment year 2017-18 and onward. It will be a painful time. If any addition under above referr sections is done. During the course of assessment. During the course of survey or search operation. Prior to amendment of section 115BBE, addition to income under above referred section was not as penalizing as it has become post demonetization amendment.

 

 

About The Author

Name: Madhu Shahu

Author is a CA Final Student (ICAI) and a  B.com graduate. She was an article assistant in M/s. SSRPN & Co. and has great exposure in Direct Tax.