The new rules, effective 17 June, plug a loophole in a tax provision that allowed tax evaders to escape imprisonment by paying up a little extra. The new CBDT guidelines will be applicable to all offenders who opt for the compounding of offence provision on or after 17 June. A tax defaulter who avoids or neglects rules that result in tax evasion is first charged an interest on the due tax amount. A further penalty may get added if the person fails to pay tax along with the interest within the specified period. The person against whom court proceedings are initiated for alleged tax evasion can appeal to the income-tax department under the compounding of offence provision.

Source: Mint July 01, 2019 15:45 UTC