The Lok Sabha has passed the Taxation Laws (Second Amendment) Bill, 2016 to amend the Income Tax Act, 1961 and Finance Act, 2016 on 29 November 2016. The Bill was introduced in Lok Sabha on 28 November 2016.
- It imposes a higher rate of tax and penalty in respect of undisclosed incomes.
- The Bill proposes to introduce the Pradhan Mantri Garib Kalyan (PMGK) Yojana, 2016.
The new Taxation Laws (2nd Amendment) Bill 2016, passed sans debate in the Lok Sabha on Tuesday, will entail a tax of 30 per cent of the income declared, an additional surcharge of 33 per cent of the tax amount, and a penalty of 10 per cent of the declared income.
- This adds up to a total liability of about 50 per cent. In addition, the amendment states that 25 per cent of the declared income is to be deposited in an interest-free deposit scheme with a lock-in of four years.
If undeclared, then the unexplained amount will face a flat tax of 60 per cent, a surcharge of 25 per cent of the tax amount, and a possible 10 per cent penalty at the discretion of the assessing officer. This takes the total levy on undeclared income or assets to as much as 85 per cent.