Understanding Tax on Income Found in IT Searches (Clause 192 vs Section 113)
Earlier, Section 113 of the Income-tax Act, 1961 governed such cases. Now, Clause 192 of the Income Tax Bill, 2025 proposes a new computation method.
Here’s a simple breakdown of what’s changing, and how it affects you.
Clause 192 (Bill 2025) vs Section 113 (1961 Act)
| Feature | Clause 192 (New Bill) | Section 113 (Old Act) |
|---|---|---|
| Tax Rate | Flat 30% | Flat 30% |
| Surcharge | Mandatory 10% | Only if total income > threshold |
| Cess | 4% on tax + surcharge | 4% on tax + surcharge |
| Slab Benefit | Not allowed | Not allowed |
| Set-off of Losses | Not permitted | Not permitted |
| Deductions (like 80C) | Not allowed | Not allowed |
| Time of Chargeability | As per amended scheme | On total undisclosed income of block period |
📌 Expert View:
Clause 192 removes ambiguity by mandating surcharge in all search-related tax cases. This avoids disputes seen earlier in courts regarding whether surcharge is compulsory when total income is below surcharge threshold.
Why This Matters: CBDT Clarification & Legal Background
- The Supreme Court in Suresh N. Gupta vs. CIT (2008) ruled that surcharge was not applicable on block assessments unless specified.
- This caused conflicting High Court rulings across India.
- Clause 192 ends this confusion by codifying surcharge into the main provision itself.
✅ Legal Source: Refer Clause 192 of the Income Tax Bill, 2025
When Will Clause 192 Be Applicable?
If passed as-is, Clause 192 will replace Section 113 from Assessment Year 2026–27 (Financial Year 2025–26).
FAQs: Search Income Taxation Rules
Q1. Can I claim deduction under 80C for search-based income?
No, Clause 192 and Section 113 both disallow any deductions or exemptions.
Q2. Is surcharge now mandatory on all search-related income?
Yes. Under Clause 192, surcharge is compulsory regardless of total income.
Snippet (40–50 words):
Clause 192 of the 2025 Bill mandates a flat 30% tax plus mandatory 10% surcharge and 4% cess on undisclosed income found during search operations, removing ambiguities in Section 113 of the Income-tax Act, 1961.
Need help navigating search-related assessments or income disclosure?
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