Income tax rules from today,Tax defaulters can’t escape

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Income tax rules from today Tax defaulters can't escape

Income tax rules from today,Tax defaulters can’t escape

Income tax rules from today,Tax defaulters can’t escape.The Central Board of Direct Taxes (CBDT) issued revised guidelines on ‘Compounding of offences under the direct tax laws’ on late Friday.

This will come into effect from June 17, 2019 and apply to all compounding applications received post this date. It may be noted that the revised guidelines will supersede the earlier guidelines which were issued in December 2014.

Taxpayers such as those who stash their black money abroad will no longer be able to compound their offences, which is a process of paying a stiff compounding fee in lieu of prosecution, according to a ToI report.

The national publication cited Sandeep Bhalla, partner, Dhruva Advisors, as saying, “The earlier CBDT guidelines permitted compounding of offences relating to undisclosed foreign bank accounts and overseas assets if the taxpayer has cooperated and paid the taxes.

The Anti-Black Money Act of 2015, which was subsequently introduced, did not permit compounding. This Act had provided a limited window within which people could come clean against payment of a flat 30 per cent tax and stiff penalties.

Income tax rules from today Tax defaulters can't escape

The revised guidelines have taken this forward and compounding is not permitted both for cases covered under the Anti-Black Money Act and all offences relating to undisclosed foreign bank accounts or assets.”

“Compounding shall also not be available where it is proved that taxpayer-enabled others to evade tax, such as through entities used to launder money.

The bar also applies where a taxpayer generated bogus invoices of sales or purchase or provided accommodation entries.

Offences under the Benami Transactions Prohibition Act, too, cannot be compounded,” the national daily quoted Gautam Nayak, tax partner at CNK & Associates.

An official explained, “Typically, accommodation (bogus) entries are routed through shell companies, as share capital, in order to evade tax. Or to launder money, fake loans are shown in account books by a business entity,” explains an I-T official.

The revised guidelines are more stringent and various offences cannot be compounded, some of these relate to undisclosed foreign bank accounts and assets, Benami transactions, money laundering through accommodation entries, bogus invoices etc.

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