Income-tax Act, 1961Section 115BBE
- Flat 60% on income under sections 68 to 69D
- No deduction, allowance or loss set-off against such income
- Surcharge applied on top of the 60% rate
Applies to FY 2025-26 (AY 2026-27) and earlier years.
IT Act 1961 → 2025 / Section 115BBE
Tax rates & regimeSection 115BBE → Section 195
Tax rate on unexplained income (cash credits, investments, money, expenditure)
Section 115BBE of the old Income-tax Act, 1961 · new section 195 under the Income-tax Act, 2025
New reference Section 195
Income-tax Act, 2025Section 195
- Section 195 applies to income under sections 102 to 106
- Rate reduced to 30% from 1 April 2026 (Finance Act 2026)
- No deduction, allowance or loss set-off (195(2))
Applies from tax year 2026-27 (from 1 April 2026).
What changed
A real change. The Finance Act 2026 cut the rate on unexplained income from 60% to 30% in the new section 195, from 1 April 2026.
Practice notes
- For AY 2026-27 and earlier, section 115BBE at 60% continues to apply.
- Check the surcharge applicable to this income under the Finance Act for the year.
Frequently asked
What is the tax rate on unexplained income under the new Income Tax Act 2025?
30% under section 195 (reduced from 60% by the Finance Act 2026), with no deduction or loss set-off.
What is section 115BBE called in the new Income-tax Act, 2025?
Section 115BBE of the Income-tax Act, 1961 corresponds to Section 195 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).
What changed in section 115BBE under the new Income Tax Act?
A real change. The Finance Act 2026 cut the rate on unexplained income from 60% to 30% in the new section 195, from 1 April 2026.
Is section 115BBE still applicable for FY 2025-26?
Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 115BBE of the 1961 Act. Section 195 of the 2025 Act applies from tax year 2026-27.