Paying taxes is a burden for many, individuals often come up with ways to escape or reduce the burden. But do you know that failing to pay taxes accurately can lead to criminal charges? Tax evasion occurs when a person or corporation unlawfully stops paying its tax or pays a partial amount of taxes. Tax evasion is a criminal activity and, as per Chapter XXII of the Income Tax Act, 1961, those who are found evading taxes are liable to face criminal charges and fines.
Tax avoidance includes hiding or fake revenue, without documentation of exaggerated deductions, without disclosing cash transactions, etc.
Activities considered as Tax Evasion according to the Income Tax Act
Say, for example, a person claims for depreciation when there is no asset in the company or claims for depreciation of properties used for residential purposes. It is simply a dishonest tax obligation avoidance process.
The following are main practices that are deemed to be tax evasion:
1. Concealing the Income
2. Claiming excessive expenditure
3. Falsification of accounts
4. Inaccurate financial Statements
5. Not reporting income
6. Storing wealth outside the country
7. Filing false tax returns
8. Fake documents to claim exemption
How to file complaints regarding tax evasion?
The Central Board of Direct Taxes has introduced an online dedicated e-portal on the Department's e-filing website to accept and process tax evasion allegations, foreign hidden properties, as well as Benami property complaints.
Step 1 Visit the Income-tax department website
Step 2 Login using the credentials
Step 3 Click "File complaint of tax evasion/undisclosed foreign asset/ benami property"
Step 4 Enter the OTP received on your registered mobile number. After an OTP based validation process
Step 5 File your complaint
In the case of violations of the Income-tax Act, 1961, Black Money, Imposition Taxes Act, and the Benami Dealings Act, in three main forms meant for that purpose. Upon successful submission of the complaint, the Department will assign a specific number to each complaint and the complainant will be able to view the status on the website.
Types of Penalties for different types of Tax Evasion in India:
If a person or a business company is discovered to be attempting to avoid taxation, fines can be levied based on the type of violation.
Not filing Income Tax Returns - Failure to do so would result in a penalty of Rs 5000 or more as determined by the Assessing Officer.
Incorrect Pan details or not providing the PAN details - You would have to pay Rs 10,000 if the PAN information you provided is inaccurate.
Concealing Income - Applicable when someone reports less income than what they receive or covers various sources of income. A penalty will be charged and varies from 50% to 200 % of the amount of tax-deferred.
Not complying with TDS regulations - If TDS has not been filed on or before the due date, the taxpayer must pay the interest for each day that passes after the due date, before the payment is made. If you fail to get the TAN number then you need to pay a penalty of Rs 10,000. Its sum could start from Rs 10,000 and go up to Rs 1, 00,000.
Not Maintaining Compliant Books/Accounts -Assessing officer can impose a penalty of up to Rs 25,000.
Failure to Get Accounts Audited - Failure to make payment in 30 days to the name and department mentioned in the notice, a penalty of Rs 1lakh or more will be applicable. If any document is not furnished or attached, a penalty of 2% of the transaction's value is levied.
To ensure that tax defaulters and offenders are brought to light, the Income Tax Act works aggressively. So, better to pay the appropriate tax on time.