Taxation Laws Bill: An explainer

Taxation Laws Bill: An explainer

Submitted by alvin on Fri, 2016-12-02 15:51 Here are the salient features of the Taxation Laws (Second Amendment) Bill, 2016, which is aimed at assessing and levying penalty on the deposit of unaccounted high denomination notes in the bank and acquiring of asset from such unaccounted money.   Demonetization of old high denomination notes (OHD) with effect of midnight of November 8 was aimed to be a huge blow at those who were hoarding such currency as unaccounted cash. Caught by surprise, such persons thought of declaring such amount as current year’s income by paying tax @ 30�lus surcharge under the safe mode.  The general impression is that, after all, the IT Department needs the tax at the maximum rate ie. present rate of 30�That too if the same is offered voluntarily there is no ‘mens rea’ ie. the intention or culpable status of mind to evade law, hence get away with the 30�ax as against the 45�hich was proposed in the IDS’2016  (Income Disclosure Scheme) which ended on 30.09.2016. Many have interpreted that the section 270A which is newly introduced in Budget’2016 which mandates for the 200�enalty for the misreporting and 50�or the underreporting of Income and defined what is misreporting and what is underreporting. Accordingly, various experts have opined that it may not amount to misreporting since there is voluntary disclosure might come under underreporting. Further, some other tax experts felt that according to the existing mechanism provided under section 270A of the Income Tax Act, 1961, no penalty on such declared amount would be possible or permissible as there would be no ‘under-reporting’ of income when such income is suo motu declared in the Income Tax Return. So, The Taxation Laws (Second Amendment) Bill, 2016 introduced in the Lok Sabha by the Government on November 28th, 2016 seeks to clear doubts and contradiction. The Government has given another opportunity to declare undisclosed income post-demonetization. The highlights of the above said provision are: 1.      New Chapter IX A: A scheme has been introduced in the Bill titled as “Taxation And Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016”. It is again a type of Income Declaration Scheme, 2016 which states any person may make declaration in respect of any income in the form of cash or bank deposits made with the specified entity during the period of scheme. The undisclosed income so declared under the scheme shall be chargeable to tax, surcharge and penalty aggregating to 50�f the undisclosed income. Further, an amount of 25�f undisclosed income is required to be deposited in the “Pradhan Mantri Garib Kalyan Deposit scheme’2016