Section 271AAC → Section 345
Penalty in respect of certain income (Unexplained Money)
Quick Answer
Section 271AAC of the Income Tax Act, 1961 (Penalty in respect of certain income (Unexplained Money)) corresponds to Section 345 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 271AAC
Under the Income Tax Act, 1961, Section 271AAC governs penalty in respect of certain income (unexplained money). Penalty @ 10% on tax calculated under 115BBE for unexplained cash, stock, or investments.
From 1st April 2026, the same subject sits at Section 345 of the Income-tax Act, 2025 — retained and renumbered as Section 345 of the Income-tax Act, 2025. Retained. If income is determined under 68/69/69A etc., the total effective tax + penalty rate reaches ~78%.
For Section 271AAC, the practical impact is rated Very High. Extremely punitive for unexplained wealth.
Sec 271AAC
Provision Summary
Penalty @ 10% on tax calculated under 115BBE for unexplained cash, stock, or investments.
Sec 345
Provision Summary
Retained. If income is determined under 68/69/69A etc., the total effective tax + penalty rate reaches ~78%.
Key Changes & Highlights
- Strictly enforced; no discretion given to the AO to waive this penalty.
Related Sections
Frequently Asked Questions
What is Section 271AAC of the Income Tax Act, 1961 about?
Section 271AAC of the Income Tax Act, 1961 covers penalty in respect of certain income (unexplained money). Penalty @ 10% on tax calculated under 115BBE for unexplained cash, stock, or investments.
Which section replaces Section 271AAC in the Income-tax Act, 2025?
Section 271AAC of the Income Tax Act, 1961 maps to Section 345 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained. If income is determined under 68/69/69A etc., the total effective tax + penalty rate reaches ~78%.
What is the impact of the change to Section 271AAC under the new tax code?
The transition impact for Section 271AAC is rated Very High. Extremely punitive for unexplained wealth.
What should I watch out for when Section 271AAC moves to the 2025 code?
Strictly enforced; no discretion given to the AO to waive this penalty. These points are specific to Section 271AAC (Penalty in respect of certain income (Unexplained Money)).
Disclaimer: This mapping of Section 271AAC (Penalty in respect of certain income (Unexplained Money)) to Section 345 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 271AAC is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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