Beware And Avoid Costly Consequences of Income Tax Evasion

Tax evasion is illegal and can have serious repercussions. Be cautious while completing your income tax return and be aware of potential places where individuals may attempt to avoid paying taxes. Tax evasion is the illegal avoidance of tax payments through practices such as:

  • Withholding or hiding income – Inflating or faking documentation to support deduction claims
  • Filing false income tax returns
  • Not submitting tax returns
  • Not disclosing financial transactions
  • Entering erroneous information in the books of accounts to lower taxable income or raise cost deductions

The Income-tax Act of 1961 defines tax evasion as a severe offence that carries penalties. It’s important to realize that fines might be imposed automatically or at the tax authorities’ discretion.

The Act Defines The Following Penalties

1. Nonpayment of Self-Assessment Tax

  • Penalty: Up to the Assessing Officer’s determination of the outstanding tax amount.

2. Furnishing Return Default

  • Penalty: Rs 5,000 in case the return is submitted beyond the deadline. If the total income is less than Rs 5 lakhs, it is reduced to Rs 1,000.

3. Income Underreporting and Misreporting

  • Penalty: 200 percent if there is evidence of misreporting; 50 percent if income is underreported.
  • Underreporting examples include calculating income that exceeds completed returns and inflating losses.
  • Misrepresenting facts, neglecting to register investments, making unsubstantiated expense claims, etc. are a few examples of misreporting.

4. Neglecting to Keep Accounts Records

  • Penalty: Rs 25,000 for failing to keep records by section 44AA. Two percent of the value of such transactions, or certain domestic transactions, in the case of foreign transactions.

5. Not Having Accounts Audited

  • Penalty: Failure to get accounts audited will result in a lower of Rs 1,50,000 or 0.5 percent of total sales, turnover, or gross revenues. An amount of Rs 1,00,000 is due in case audit reports about overseas transactions are not provided.

6. Calculating Unreported Income

  • Penalty: Three times the tax levyable about the undeclared income, not less than the tax amount.

7. Penalties for Tax Payment Default

  • Penalty: Assessing Officer imposed in the event the taxpayer is considered an assessee in default. The arrears of tax are not greater than the penalty.

Find Your Daily Dose of NEWS and Insights - Follow ViralBake on WhatsApp and Telegram

Stuti Talwar

Expressing my thoughts through my words. While curating any post, blog, or article I'm committed to various details like spelling, grammar, and sentence formation. I always conduct deep research and am adaptable to all niches. Open-minded, ambitious, and have an understanding of various content pillars. Grasp and learn things quickly.

Related Articles

Back to top button

AdBlocker Detected

Please Disable Adblock To Proceed & Used This Website!