Implication of Tax Under Various Scenarios

Implication of Tax on Undeclared Income:

Declaration under Pradhan Mantri Garib Kalyan Yojana 2016

Tax @30% on Undeclared Income

Surcharge @33% on Tax

Penalty @10% on Declared Income

It means 49.9% of the Income will be charged as Tax and Penalty.

Rest 25% needs to be deposited for 4 years in Pradhan Mantri Garib Kalyan Yojana which will not yield any interest. The remaining fund will be available to the individual. It also provides immunity against any further prosecution barring exceptional cases.

Tax and Penalty on Undeclared Income/Wealth Under Section 115BBE

Tax @60% on Undeclared Income

Surcharge @25% on Tax

This implies that 75% of the Income will be charged as Tax with a provision to levy additional 10% penalty on Tax Payable including surcharge in certain cases at the discretion of the Assessing Officer.

Tax and Penalty on Undeclared Income/Wealth recovered during Raids/Seizure Under Section 271AAB

Incase, Individual admits to Tax Evasion

Tax @30%

Penalty @30%

Total Tax implication of 60% of the Undeclared Wealth

In other scenarios,

Tax @30%

Penalty @60%

Total Tax Implication of 90% of the Undeclared Wealth

No Tax on Inherited Gold and Jewellery

Amendments won’t tax the inherited gold and jewellery or items purchased through disclosed/agricultural income. During seizure and raids, gold and jewellery upto the extent of 500gms per married woman, 250 gms per unmarried woman, 100gms per male member would be exempted.
Demonetization: Potential Impact on Economy and Finance