SEC. 115 BBE OF I.T. ACT & OPERATION CLEAN CASH. CA. RAKESH AGRAWAL M.COM., LL.B., FCA, DISA Mob. :

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1 SEC. 115 BBE OF I.T. ACT & OPERATION CLEAN CASH CA. RAKESH AGRAWAL M.COM., LL.B., FCA, DISA Mob. :

2 SEC. 115 BBE : OLD VERSION [Introduced By Finance Act 2012] If total income includes income u/s 69, 69A, 69B, 69C, 69D, Income Tax will be (a) 30% Tax on income u/s 69, 69A, 69B, 69C & 69D + (b) Income Tax on remaining income by applying normal slab & rates

3 SEC. 115 BBE : OLD VERSION [Introduced By Finance Act 2012] Notwithstanding anything contained in this act : No deduction of any expenditure or allowance & No Set off of any loss out of income : (a)

4 NEW SECTION 115BBE Amendment made by Taxation Laws (Second Amendment) Act, 2016 in Nov Applicable w.e.f i.e. from FY Applicable to resident as well as NRI & applicable to all types of assessees like individual, HUF, company, firm, trust etc. Amended to strengthen Demonetisation Phase, To Promote PMGKY & Discourage generation and accumulation of black money.

5 NEW SEC. 115 BBE Sub Sec. (1) Where the total income of an assessee, a) includes any income ref. to in section 68,69,69A,69B,69C or 69D and reflected in the return of income furnished under section 139; or b) determined by the A.O. includes any income ref. to in section 68, 69, 69A, 69B, 69C or 69D, if such income is not covered under clause (a) Tax = 60% of income (a) or (b) + Tax on Other Income as per regular slab Cess of 25% on above tax + Education Cess of 3% Resulting Effective Tax = 77.25%

6 PENALTY U/S 271AAC Where the income determined includes any income referred to in section 68, 69, 69A, 69B, 69C or 69D, the assessee shall pay by way of 10% of the tax payable. No penalty u/s 271AAC if such income has been included in the return furnished u/s 139 and the tax paid thereon upto the end of the relevant previous year. No penalty u/s 270A shall be imposed upon the assessee in respect of such income

7 STEPS TO LESS CASH ECONOMY TRANSACTION IN CASH ABOVE RS. 2 LAKHS IS PROHIBITED [SEC. 269ST] No person [either in business or in personal transactions] will receive from any other person Rs. 2 lakhs or more in cash in 3 conditions: (I) In aggregate in a day, or (II) Against a transaction, or (III) Against a transaction relating to an event or occasion from a person.

8 STEPS TO LESS CASH ECONOMY PENALT Y FOR CONTRA VENT ION OF SECTION 269ST [NEW SEC. 271DA] 100% of such receipt

9 STEPS TO LESS CASH ECONOMY SN AMENDMENTS EXISTING REVISED 1. Cash payments for expenses to a person in a day under [Section 40A(3), (3A)] Rs Rs Presumptive income under section 44AD Min. 8% of total turnover/ gross receipts Min. 6% of such turnover received through banking channel before due date of ITR

10 STEPS TO LESS CASH ECONOMY No cash payments for capital expenditure No deduction for depreciation if payment for purchase of asset made in cash exceeding Rs No deduction u/s 35AD if payment against capital expenditure is made in cash exceeding Rs

11 STEPS TO BECOME LESS CASH CASH DONATIONS ( SECTION 80G): Maximum Limit of Cash donation reduced to Rs from Rs

12 STEPS TO CASHLESS ECONOMY REPORTING TO INCOME TAX DEPARTMENT Cash Deposit in Saving A/c Rs. 10 lakhs or more or Cash Deposit / Withdrawal in / from Current A/c exceeding Rs. 50 lakhs Receipts of cash payments more than Rs. 2 lakhs against sale of goods or services by assessee covered u/s 44AB (SFT is to be filed)

13 OPERATION CLEAN CASH ITD initiated Operation Clean Money, for e-verification of large cash deposits made from to In the first batch, lakh persons identified Lakh people submitted online response. The information available in the e-filing window. PAN holder (after log in) under Cash Transactions 2016 For compliance no need to visit Income Tax office. A detailed user guide available on the portal. The response of taxpayer will be assessed against available information. In First phase > 60,000 persons, including 1,300 high risk persons identified for investigation.

14 OPERATION CLEAN CASH Now ITD identified 5.56 lakh new cases. ITD identified another 1.04 lakh persons who failed to disclose all bank accounts during the first phase of OCM. ITD mandated to disclose cash deposited during demonetization period in the bank accounts aggregating to Rs 2 lakh or more in ITR. Care to be taken while filing ITRs of such cash deposit.

15 OPERATION CLEAN CASH - PROCEDURE Open Cash Transaction 2016 under compliance window. Information from Bank displayed on face wherein You have to accept the same or decline. Details of other banks wherein SBN deposited can be given. If account relates to PAN pre-filled cash deposit figure may be modified. The user can revise the submitted response by clicking on the Submit button. Additional information may be required by ITD against first response. It will be depicted on Cash Transaction 2016 window as Additional Information Request Pending.

16 OPERATION CLEAN CASH - PROCEDURE Source of Cash to be declared as Risk Criteria (a) Out of earlier incomes or savings. 6 (b) Out of exempt income 5 (c) Out of withdrawals from bank 1 (d) Cash received from identifiable persons with PAN 2 (e) Cash received from identifiable persons without PAN 3 (f) Cash received from unidentifiable person 4 (g) Cash Disclosed in PMGKY

17 OPERATION CLEAN CASH - PROCEDURE Nature of Transactions (a) Cash Sales (b) Loans Received in cash (c) Loan Repayment in Cash (d) Gift Received in Cash (e) Donation Received in Cash (f) Other Cash Receipt Code RS RL RR RG RD RO

18 THANKS!