Now, pay 137% in tax, penalty on black money post I-T raid

Total levy to be 107.25% if the undisclosed income is admitted to and substantiated during the raid

Black money holders will have to bear taxes and penalties amounting to as high as 137 per cent if they do not admit to or fail to explain the source of undisclosed income after being raided, the income tax department said on Monday.

However, the total levy can touch 107.25 per cent if the undisclosed income is admitted to during search operations and that income substantiated, the department said in a release, adding that tax dodgers can come clean by paying 50 per cent on bank deposits post demonetisation.

If one fails to admit his unexplained income during the course of the search and in case the taxes are not paid and he does not substantiate the manner in which the income is earned, then the tax incidence will be 137.25 per cent, the tax department said in a release.

However, if the undisclosed income is admitted during the search, taxes are paid and return is filed before the specified date declaring this income and the assessee substantiates the manner in which the income is earned, then the tax rate will be 107.25 per cent, the release added.

"We are asking people to declare their undisclosed cash deposits in banks and post offices, which have not been subject to tax earlier under the Pradhan Mantri Garib Kalyan Yojna, 2016 (the scheme)," Principal Chief Commissioner of Income Tax (NWR) Rajendra Kumar said on Monday.

This scheme, which has come into effect on December 17, shall remain open for declarations up to March 31, 2017, he said.

If the income is not admitted during the search and the assessee is not able to substantiate the earning, it will attract 60 per cent tax, 60 per cent penalty, 15 per cent surcharge, three per cent education cess surcharge — amounting to 137.25 per cent.

In case the income is admitted to during the search and the assessee is able to substantiate the earning, it will attract 60 per cent tax, 30 per cent penalty, 15 per cent surcharge, three per cent education cess surcharge — totalling to 107.25 per cent.

The Taxation Laws (Second Amendment) Act, 2016, has amended the penalty provisions in respect of search and seizure cases, the release said.

The existing slab for penalty of 10 per cent, 20 per cent and 60 per cent of income levied under section 271AAB has been rationalised to 30 per cent of income, if the income is admitted and taxes are paid. Otherwise, a penalty at the rate of 60 per cent of income shall be levied, the department said in the release.