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8 Points On The New Tax Rules On Penalty Against Black Money & Benami Property


The Central Board of Direct Taxes (CBDT) recently revised its guidelines to make serious offences under black money and benami laws accountable. Those indulging in these activities will not be able to get away just by paying off a penalty fee.

8 Points On The New Tax Rules On Penalty Against Black Money & Benami Property

Here are some things you need to know about the 32-page revised guideline for compounding of offences under direct tax laws, 2019.

  1. Earlier, taxpayers could settle cases of tax evasion by just paying the tax demand, penalty and interest. Now, the IT department can file a prosecution case against the tax evader in the court, in lieu of payment of due taxes and surcharges under section 279(2) of the Income Tax Act.
  2. The Income Tax department may allow compounding after considering factors such as conduct of the offender, the nature and magnitude of the offence in the context of the facts and circumstances of each case. Compounding means the offender will not be prosecuted in return for a consideration (penalty).
  3. According to the new guidelines, offences under serious criminal cases of money laundering, terror financing, corruption, possession of benami propertiesand undisclosed foreign assets will be "generally" non-compoundable.
  4. The fresh guidelines also mentions offences related to anti-national or terrorist activity or those being investigated by the Enforcement Directorate, CBI, Lokpal, Lokayukta or any other central or state agency like the local police will also be "generally" non-compoundable.
  5. The Union Finance Minister will hold the sole authority to relax these guidelines in a "deserving case" after obtaining a report from the CBDT.
  6. Cases in which the person seeking compounding of an offence under the I-T Act was convicted by a court for two years or more will be treated under the no compounding category.
  7. Offences under Sections 275A, 275B and 276 of the Act cannot be compounded.
  8. The new guideline will supersede the one issued in 2014.

Story first published: Saturday, June 22, 2019, 13:36 [IST]
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