The new income tax rules are aimed at streamlining action against serious cases of black money and criminal tax evasion, says a CBDT official. (Photograph: Brent Lewin/Bloomberg)

New Income Tax Rules Offer No Relief To Black Money Cases

The Central Board of Direct Taxes on Monday issued revised income tax rules, which make it difficult for tax evaders to escape by simply paying a penalty.

Indulgence in serious criminal cases of money laundering, terror financing, corruption, possession of benami properties and undisclosed foreign assets will virtually shut the door on a person’s chances of getting relief in a tax evasion offence beginning Monday, the CBDT said.

The CBDT has issued a revised 32-page guideline for 'Compounding of Offences under Direct Tax Laws, 2019', which will be executed under the Income Tax Act, 1961.

The new directives make it clear that compounding of offences is "not a matter of right" and the CBDT can extend such a relief only in certain cases keeping in view factors like "conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case".

Compounding in Income Tax parlance means that the CBDT does not file a prosecution case against the offender or tax evader in court in lieu of payment of due taxes and surcharges.

The fresh guidelines state certain offences will "generally not be compounded" if the person has been found involved "in any manner, in an anti-national or terrorist activity" or is being investigated by the Enforcement Directorate (for offences under Prevention of Money Laundering Act, Central Bureau of Investigation (under Indian Penal Code and Prevention of Corruption Act), Lokpal, Lokayukta or any other central or state agency like the local police.

Any other offence, which the competent authority considers not fit for compounding "in view of factors such as conduct of the person, nature and magnitude of the offence" will also not be compounded, the CBDT said.

Also, cases in which the person seeking compounding of an offence under the Income Tax Act was convicted by a court for two years or more will fall under the no compounding category, it said.

It adds that the Union finance minister will be sole authority to relax these guidelines in a "deserving case" after obtaining a report from the CBDT.

The exhaustive guidelines inform Income Tax officials in detail about the relaxation of time, competent authority for compounding offences, procedure and charges among other processes for compounding.

A senior CBDT official said the new income tax rules are aimed to streamline action against serious cases of black money and criminal tax evasion.

Also read: Income Tax Department Defers Reporting GST, GAAR In Audit Till March 2020

Bloomberg Quint

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