New Income Tax rules in effect from today
The Central Board of Direct Taxes (CBDT) issued revised guidelines on 'Compounding of offences under the direct tax laws' on late Friday.
The revised guidelines on 'Compounding of offences under the direct tax laws' have come into effect from today. The rules were issued by the Central Board of Direct Taxes (CBDT) late on Friday and aim at tightening the screw on tax evaders. The new rules have also made serious offences under black money and benami laws "generally" non-compoundable.
To put simply, a person or entity will not be able to settle a case of tax evasion by just paying the tax demand, penalty and interest.
Taxpayers such as those who stash their black money abroad will no longer be able to compound their offences, which is a process of paying a stiff compounding fee in lieu of prosecution.
The new guidelines by the CBDT will be applicable to all cases for compounding received on or after this date (June 17, 2019).
The CBDT has divided offences into two parts
Offences in the A category include failure to pay tax deducted at source under Chapter XVII-B or tax payable under Section 115-0. Failure to pay the tax collected at source also falls under this category. The first category offences are open to compounding, while offences such as willful evasion of tax and removal or concealment or transfer or delivery of property to thwart tax recovery in a search operation are not to be compounded.
According to the new guideline that supersedes the one issued in 2014, "Offences under Sections 275A, 275B and 276 of the Act will not be compounded."
Any offence which has to bear on any offence under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 would not be generally compounded, the revised guidelines said.
Moreover, the guidelines state that a category 'A' offence on more than three occasions would not be generally compounded.
Offences in the B category include willful attempt to evade tax, failure to produce accounts and documents, and false statement in verification.
The CBDT guidelines said that offences committed by a person which, as per the information available with the Principal Chief Commissioner of Income Tax and other officials concerned, have a bearing on a case under investigation (at any stage including enquiry, filing of FIR/complaint) by the Enforcement Directorate, CBI, Lokpal, Lokayukta or any other Central or state agency are also not to be normally compounded.
"Notwithstanding anything contained in these guidelines, the Finance Minister may relax restrictions in Para 8.1 for compounding of an offence in a deserving case, on consideration of a report from the Board on the petition of an applicant," said the tax body.
