Analysis of The Taxation Laws (Second Amendment) Bill, 2016


CA Gautam Baid has prepared a bird’s eye-view review of the Taxation Laws (Second Amendment) Bill, 2016 in which he has identified all the core points that all tax professionals and tax payers have to be aware about

Analysis of The Taxation Laws (Second Amendment) Bill, 2016

Amendment to Income Tax Act, 1961

– Tax payable u/s 115BBE increased from 30% to 60% (Income assessable u/s 68, 69, 69A, 69B, 69C or 69D)

– Surcharge on income taxable u/s 115BBE @ 25% of tax payable

– Effective tax rate for income assessable u/s 68, 69, 69A, 69B, 69C or 69D comes to 75%

– Amendment to section 271AAB – Penalty where search initiated

– Penalty @ 30% where:

– Undisclosed income admitted and manner of deriving income specified in the statement recorded u/s 132(4)

– substantiates the manner in which the undisclosed income was derived

– pay tax and declare such income in return of income.

– Penalty @ 60% in all other cases

– Penalty on the income taxable u/s 115BBE (New section 271AAC)

– 10% of tax payable u/s 115BBE

– No penalty if income declared in return of income AND Tax Paid Before End Of Previous Year

– No penalty u/s 270A on such income


– Any person may make a declaration in respect of any income, in the form of cash or deposit in an account maintained by the person with a specified entity, chargeable to tax under the Income-tax Act for any assessment year commencing on or before the 1st day of April, 2017.

– Tax/ Surcharge/ Penalty

o tax @ 30% of income declared under scheme.

o Pradhan Mantri Garib Kalyan Cess @ 33% of tax i.e. 9.9% of income declared

o Penalty @ 10% of income declared under scheme

– Total Tax + Surcharge + Penalty comes to 49.9%

– At least 25% of income declared shall be deposited in ‘Pradhan Mantri Garib Kalyan Deposit Scheme, 2016’

– Pradhan Mantri Garib Kalyan Deposit Scheme, 2016

o No Interest
o Lock in period Four Year

– Declaration to be filed before Pr. Commissioner or Commissioner to be notified

– Tax, Surcharge and Penalty shall be paid before filing of declaration

– Amount declared in the scheme shall not be included in total income of the declarant for any assessment year under income tax

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3 comments on “Analysis of The Taxation Laws (Second Amendment) Bill, 2016
  1. mohan rajan says:

    @ Shri SC gupta
    Sir i think Shri mohit jains line of argument can be taken. Because the section 68 amended also talks about äny sum found credited in books of accounts…… asseee offers no explanation ….. the a.0 may charge sum so credited to income tax as income…..
    if the asssesee already has shown this credit as income and paid taxes along with filing of return then invoking section 68 and 115bbe or 270A,270 AA could be challenged.

  2. S C Gupta says:

    Sh. Mohit Jain seems to have missed the amendment in Section 68. Whatever he has mentioned in point 5 above is incorporated in amended section 68.

  3. MOHIT JAIN says:

    1. Conditions of Section 68 to 69D are CAUSE and EFFECT thereof is treating unexplained credit/expenditure/assets as income of assessee. For example, if the assessee is found to be owner of money and
    a) such money is not recorded in the books of accounts, if any, maintain AND assessee offers no explanation about the nature and source of acquisition of money (CAUSE),
    b) then money may be deemed to be income of assessee.(EFFECT)

    2. These sections will not have any implications where CAUSE is Income and EFFECT is assessee being the owner of money.

    3. In other words, these section deals with unexplained credit/expenditure/assets and not with unexplained income. Thus if assessee himself disclose certain amount as his income in ITR, though it remain unexplained on his part, it cannot be said that income is deemed under the provisions of section 68 to 69D.

    4. Thus in the absence of unexplained income being falling under section 68 to 69D, section 115BBE will not have any implications and as a result thereof that proposed amendment in section 115BBE may not yield the desired result of taxing the unexplained income at higher rates.

    5. I think, that there should have been separate section under Chapter XII – Determination of Tax in special cases, whereby higher tax rate maybe prescribed in the case where the assessee disclose certain income in his return but unable to explain the source thereof to the satisfaction of AO.

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