Prosecution norms relaxed: Income-tax defaults

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There are several provisions under the income-tax act, where non-compliances leads to prosecution , which , if proved in court of law, may lead to imprisonment.

Income tax department has issued Circular No 24 to list criteria which may lead to prosecution by the income tax department. The circular has relaxed the conditions for prosecution in order to avoid harassment of honest tax payers for procedural violations.

Failure to deposit TDS /TCS with Govt

imprisonment for 3 months to 6 years and fine

If tax deducted /collected at source is not deposited with Govt , it may lead to prosecution. However in normal circumstances prosecution will not be resorted to if the

  • amount is upto 25 Lakhs AND
  • period of delay is less than 60 days from due date

However, in exceptional cases ( e.g. habitual offenders ) prosecution can be still be launched in above cases with the prior approval of higher authorities

Wilful tax evasion

imprisonment for 3 months to 7 years and fine

Under-reporting of income, leading to evasion of tax will be processed for prosecution when the amount involved is upto Rs. 25 Lakhs.

Failure to file income tax return

imprisonment for 3 months to 6 years and fine

Similarly non filing of income tax return will not be flagged for prosecution if the tax amount involved is upto Rs. 25 Lakhs , only after prior approval of higher authorities

The complete circular can be downloaded from link below

Proactly : Compliance Management Software