Explanation
Section 115BBE is the most punitive provision in the Income Tax Act for undisclosed or unexplained income. It is triggered when income is assessed under §68 (unexplained cash credits), §69 (unexplained investments), §69A (unexplained money, jewellery, or bullion), §69B (investments not fully disclosed), §69C (unexplained expenditure), or §69D (amounts borrowed or repaid in hundi transactions). The base tax rate is 60%, to which a 25% surcharge is added on that tax — not on the income — resulting in a tax of 75%, and after adding 4% cess the effective rate is approximately 83.25%. No losses can be set off against such income, no basic exemption limit applies, no deductions under any chapter are available, and no expenditure is deductible. Even if a person voluntarily declares such income in their ITR, the §115BBE rate applies. During search and survey operations, surrendered income assessed under these sections also attracts this rate. Taxpayers must report such income honestly rather than concealing it, as the penalty for concealment is additional to this tax. Verify on the income-tax portal before filing.