Page 47 - Union Budget_2019

Union Budget 2019

10.6 Consequential amendment to section 56

The existing provisions of the Section 56, inter alia, provide that income by way of interest received on

compensation or on enhanced compensation referred to in Section 145A(b) shall be chargeable to tax.
However, the Finance Act, 2018substituted the provisions of Section 145A with Section 145A and Section

145B but no consequential amendment was made in Section 56.

It is proposed to amend Section 56 to provide the correct reference of Section 145B (1) in Section 56, in

place of the existing reference of Section 145A(b).

This amendment will take retrospective effect from 1st April, 2017 and will accordingly apply in relation to

assessment year2017-18 and subsequent assessment years.

10.7 Rationalisation of penalty provisions relating to under-reported income

The existing provisions of 270A provides for various situations for the purposes of levy of penalty for under
reporting or misreporting of income. However, these provisions do not contain the mechanism for
determining under-reporting of income and quantum of penalty to be levied in the case of under reporting

of income and furnished the return for the first time under Section 148 i.e. under income escaping
assessment.

In order to provide for manner of computing the quantum of penalty in such case, it is proposed to suitably
amend the provisions of section 270A which is as follows: -

• A person shall be considered to have under-reported the income if
o the income assessed is more than the maximum amount not chargeable to tax ("basic exemption

limit - BEL")
o the amount of deemed total income assessed for the purpose of Minimum Alternate Tax ("MAT")
and Alternate Minimum Tax ("AMT") is greater than BEL

• The amount of under-reported income shall be
o the amount of income assessed, in case of company, firm of local authority

o in any other cases, the difference between the amount of income assessed and BEL
• The tax payable shall be the amount of tax calculated on the under-reported income as increased by

BEL as if it were the total income
• The penalty shall be sum equal to 50% of the amount of tax payable on under-reported income

These amendments will take effect retrospectively from 1st April, 2017 and will, accordingly, apply in

relation to assessment year 2017-2018 and subsequent assessment years.

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