The Central Board of Direct Taxes (CBDT) has said that the 45 per cent tax, surcharge and penalty under the Income Disclosure Scheme, 2016, cannot be made out of undisclosed income without including the amount under the scheme. Paying the 45 per cent to the exchequer from past undisclosed income without declaring it under the scheme would bring down the effective rate of tax, surcharge and penalty to around 31 per cent. In a clarification issued on Thursday, CBDT has said that it \u201cno way intends to modify or alter the rate of tax, surcharge and penalty payable under the Scheme. Sections 184 & 185 of the Finance Act, 2016 unambiguously provide for payment of tax, surcharge and penalty at the rate of 45 per cent of undisclosed income.\u201d Providing an example, CBDT has said taken the hypothetical case of a person who declares Rs 100 lakhs as undisclosed income, being the fair market value of undisclosed immovable property as on June 1, 2016 and pays tax, surcharge and penalty of Rs 45 lakhs (Rs 30 lakhs + Rs 7.5 lakhs + Rs 7.5 lakhs) on the same out of his other undisclosed income. CBDT has said the declarant will not get any immunity under the Scheme in respect of undisclosed income of Rs 45 lakhs utilised for payment of tax, surcharge & penalty but not included in the declaration filed under the Scheme. It has clarified that to get immunity under the Scheme in respect the entire undisclosed income of Rs 145 lakhs the declarant has to declare undisclosed income of Rs 145 lakhs (Rs 100 lakh being the undisclosed income represented by immovable property and Rs 45 lakh being the payment made from undisclosed income) and pay tax, surcharge and penalty under the Scheme amounting to Rs 65.25 lakhs or 45 per cent of Rs 145 lakhs.