Advertisement

Home / Business / Plea to review the steep tax rate on unexplained income, expenditure

Plea to review the steep tax rate on unexplained income, expenditure

The rates were raised through an amendment to section 115BBE of Income Tax Act from assessment year 2017-18 following demonetisation
Representational image.
Representational image.
File photo

A Staff Reporter   |   Calcutta   |   Published 14.12.21, 02:11 AM

Tax professionals have written to Union finance minister Nirmala Sitharaman to review the steep tax rate of 60 per cent on unexplained income and expenditure and consider reverting to the pre-demonetisation level of 30 per cent.

The rates were raised through an amendment to section 115BBE of Income Tax Act from assessment year 2017-18 following demonetisation.

However, five years have passed since demonetisation and the rates under this section have been kept unchanged.

Direct Tax Professionals’ Association (DTPA) in its pre-budget memorandum to the finance minister said if the income tax department continues to treat surrendered income as deemed income, it will be subject to tax at 60 per cent.

With a surcharge and education cess, the effective aggregate rate under section 115BBE works out to 78 per cent.

Further, if the assessing officer charges an additional penalty of 10 per cent under section 271AAC in case the income has not been disclosed while filing return, the overall tax burden on the assessee works out at 84 per cent.

“It is prohibitive and needs urgent review. It is desirable that tax under section 115BBE should be at best 30 per cent or the maximum marginal rate. The rate was basically increased due to demonetisation. It should be brought back to pre assessment year 2017-18 level,” the association said in its representation.

Narayan Jain, advocate and chairman of the representation committee of the DTPA, said that the high rate of tax was an unjust one and should be lowered to 30 per cent immediately.

K.K. Jain, president of DTPA said that the provisions of taxing income on notional basis needed to be curtailed and only real income taxed.

Among the other points raised by the DTPA in its memorandum is the increase in exemption limit of individual assessees to Rs 4 lakh. Further, under section 44ADA of Income Tax Act,  presumptive income scheme applies in case of professionals if income is within Rs 50 lakh. The association has urged the government to increase the limit to Rs 1 crore and the income should be presumed as 30 per cent of gross receipts instead of 50 per cent at present.



Advertisement
Advertisement
Advertisement
 
 
 
Copyright © 2020 The Telegraph. All rights reserved.