Filing Income Tax Return :Points to...
Those individuals who are not subject to the tax audit provisions under Income Tax Act, the ITR...
In India, evading income taxes is a crime. Tax evasion is punishable by severe fines under Chapter XXII of the Income-tax Act of 1961, and in some circumstances may even lead to imprisonment. The below mentioned are some of the situations in which non-compliance with Income Tax regulations can lead in a severe penalty for tax evasion or possibly a prison sentence of up to 7 years.
The penalty for tax evasion might vary depending on the type of fraud perpetrated and the amount of tax owed. Following are some examples of scenarios and the punishments imposed in each case:-
All taxpayers are required to file their income tax returns within the tax filing period for each fiscal year, according to Section 139 (1) of the Income Tax Act of 1961. If someone fails to file their income tax return for any reasons, they must pay a Rs. 5,000 penalty. In certain circumstances, the assessing officer can also determine the penalty amount, which might be less or greater than Rs. 5,000.
At the time of employment, several businesses request the employee’s pan card number. This information is used to calculate TDS, or tax deducted at source, from the salary of the employees. The punishment for 2 situations involving a pan card is as follows:
Failure to keep relevant information, documents, and other materials relating to an international or domestic transaction will result in a 2% penalty. The 2% must be computed on an amount equal to the total value of each foreign or domestic transaction. The taxpayer must enter the transaction information. Every transaction copy must be kept for an 8 year period. When requested by Income-tax authorities, the documentation must be delivered to the officer within 30 days. Failure to do so will result in a fine.
According to Section 271(C) of the Income Tax Act of 1961, if you hide or understate your earnings, the penalty can range between 10% and 200% of the amount of tax which was due but not paid, as specified in Section 271AAB. The percentage is calculated as follows:-
A tax deduction account number (TAN) is essential for enterprises or employers who deduct and collect tax at the source. Failure to get a TAN might result in a Rs. 10,000 fine. There are 2 types of fraud that can occur here:-
One must double-check the information on Form 26AS since any discrepancy might result in hefty penalties. Mismatches in income, expenditures, and investments data will be punishable in the same way.
In case of any discrepancies in the income tax return, the income tax (IT) department can issue a demand notice u/s 142(1) or 143(2). If this occurs, the assessing officer could issue a demand notice indicating the amount of tax still owing and requesting either the filing of a return of income or the provision of all asset and liability information in writing. The taxpayer has 30 days from the date of receipt of the document to reply to the demand notice. A penalty may be imposed in case it is not answered and pay the tax owed.
Under Section 140A (1), failure to pay tax (in whole or in part) according to self-assessment or interest is deemed tax evasion or fraud. In this situation, the assessing officer has the authority under Section 221(1) to impose a penalty on the defaulter equal to the whole amount of tax owing to the government. The penalty must not be more than the amount owed in arrears. The amount of tax owed to the Income Tax Department by the assessee is referred to as the arrear amount. Self-assessment tax, interest, surcharge, and cess are all included in the total. The assessing officer may waive the penalty if there is a genuine justification for not paying tax according to self-assessment.
Taxes are the government of India’s primary source of revenue. Tax evasion contributes to economic inequality, since some individuals become wealthier while others become poorer. Many government reform measures and initiatives have to be shelved, and social services are suffering as a result. Inflation and value erosion are caused by black money.
There are a variety of cases involving the notion of penalty for tax evasion.
The court ruled in Union of India v. Play world Electronics Pvt. Ltd. that “It is the responsibility of every person to pay taxes honestly without resorting to subterfuges”.
The Hon’ble SC said in another case, Calcutta Cromotyoe Ltd. V. Collector of C. Ex, Calcutta, that “Colourable devices cannot be used in determining tax in the nation.”
In contemporary society, there are questionable tactics that are used to deceive the authorities in order to avoid paying taxes. These methods cannot be classified or commended. Such behaviour would be regarded as illegal in nature.”
Read our article:Best Methods to Prevent Tax Evasion