New tax laws post demonetisation has left citizens baffled
With the country slowly returning to normalcy post demonetisation and cash crunch seeming to have eased, the speculations are now rife over how new tax laws on unaccounted cash would be implemented.
What amounts to taxable inflow of money and how much would be the tax rates for gifts recieved has left the citizens baffled. Inherited jewellery, gifts recieved at a wedding or cash borrowed could be questioned and taxed at a far higher rate if someone fails to offer a 'satisfactory explanation', reported the Economic Times.
If the I-T department doubts with the explanation offered over certain sources of income or expenditure, then a person could be taxed by as much as 83%, against 35% in the past.
A senior tax official in Mumbai said the provisions in the I-T act will help the department 'in mobilising tax from black money'. But, he also remained apprehensive that it could be misused.
Post demonetisation, the tax laws have undergone significant changes to empower the tax department to penalise those funds or investments whose source is unclear.
Under section 115BBE, the income under question cannot be set off against any other loss for the year or carried forward.
Earlier, if the assessing officer was not satisfied with the explanation for cash inflow, he could invoke section 115BBE and impose a tax of 30% plus the surcharge. But now, it could be as high as 60%, along with 15% surcharge and 3% cess aggregating to 77.25%, an ET report said.