The move will encourage tax compliance amongst people and is not aimed at increasing tax collection
Tax authorities have given another incentive to pay your taxes on time. The department has decided to penalize those whose undisclosed income is found during searches, even if they own up and pay the tax.
A search operation is an income tax raid, where in tax authorities search for and confiscate undisclosed income.
This is a part of the Finance Bill, 2007 presented by finance minister P Chidambaram in Parliament on Wednesday. It says, The assessee shall be liable to pay by way of penalty, in addition to tax, if any payable by him, a sum computed at the rate of 10% of the undisclosed income of the specified year.
The amendment is set to take effect from Thursday and will apply to assessments made during the next fiscal after June 1, 2007.
Till now, the department had not imposed any such penalty on those who cooperated with them during search operations. The finance ministry hopes that the move will encourage tax compliance amongst people and is not primarily aimed at increasing tax collections.
What will it mean to you Assessee shall be liable to pay penalty computed at the rate of 10% of concealed income The department had not imposed the penalty on those who cooperated Amendment in tune with the revenue dept drive to increase tax compliance
The amendment would be in tune with the revenue departments recent drive to increase tax compliance amongst people as well as to increase revenue collections. The department has also increased the number of survey operations and has found over Rs 1,000 crore of undisclosed income in this fiscal. In a related provision, the government proposes to substitute Sec 248 of the Income Tax to provide that where under an agreement or other arrangement, the tax deductible on any income, other than interest, under section 195 is to be borne by the person by whom the income is payable, and such person having paid such tax to the credit of the Central Government, claims that no tax was required to be deducted on such income, he may appeal to the commissioner (Appeals) for a declaration that no tax was deductible on such income.