Tax evasion: sanctions and other consequences according to the IT Law for evasion of income tax

NEW DELHI: Income tax evasion It is a criminal offense in India. Under Chapter XXII of the Income Tax Act of 1961, the tax evasion can attract hefty penalties along with evaded tax or in some cases may even land you in jail.

Below are some of the instances, where non-compliance with Income tax The rules can lead to a considerable penalty or even to a prison of a maximum term of 7 years:

1) Not archiving Income tax Return

If you do not submit for income tax return as required under the Section 139, sub section (1) of Income tax Act then the assessing officer can penalize you with a penalty of Rs 5,000 or more.

2) Do not provide BREAD or cite incorrect PAN

If you do not provide your PAN number to your employer at the time of employment, 20% of TDS will be deducted from your salary instead of the usual 10%. If the PAN you cited is incorrect, a penalty of Rs 10,000 may be applied.

3) Not checking Form 26AS before income tax return filing

You should verify the details of Form 26AS several times, since any mismatch in the details can lead to severe punishment. A similar penalty will be imposed on the mismatch in the income, expenditure and investment data.

4) No Tax payment according to self-evaluation.

As per Section 140 A (1) of Income tax Act, if the tax payer fails to pay either wholly or partly self-assessment tax or interest then the tax payer will be treated as a defaulter. As per Section 221(1), a defaulter may be charged with penalty by the assessing officer. But if you provide justified reasons for the delay in paying the tax then the assessing officer can exempt you from paying penalty.

5) Concealing Income to evade tax

The penalty for not proving correct details of your income or concealing income tax will be 100% to 300% of the tax evaded as per section 271(C) of Income tax Act. Under section 271 AAB, the penalty may vary under different scenarios:

a) If the tax payer admits the undisclosed income then only 10% of the previous year's undisclosed amount along with interest will be levied.

b) If the tax payer does not disclose the undisclosed amount but does so in the return of income furnished in the previous year, a penalty of 20% of the undisclosed amount along with interest will be levied.

c) If the amount has not been disclosed for the previous year, a minimum fine of 30% and a maximum fine of 90% may be imposed.

6) Not Complying with income tax notice

In case a tax payer fails to comply with the notice issued by income tax department under Section 142(1) or 143(2) then the assessing officer can issue a notice, either asking to file the return of income or to furnish in writing all the details of assets and liabilities.