Penalties under the IT Act for tax evasion that can hound tax defaulters
Filing Income Tax Return is mandatory for a person who’s earned money (read income) in a given Financial Year. It becomes especially crucial if the income earned by you crossed Rs.2,50,000 for FY 2017-18. There are a set of penalties under the IT Act for tax evasion ranging from a fine or even imprisonment that can hound Income Tax defaulters:
1. If an individual fails to pay tax whether wholly, partly or interest under Self- Assessment, then under section 221(1) of the Income Tax Act, an assessing officer can impose a penalty up to the arrear amount of the taxes not paid by an assessee. A demand notice is sent to the tax defaulter, who has to pay the tax due within 30 days.
2. If an individual is found concealing income in order to evade taxes, then as per section 271(C), the tax penalty can range from 100% to 300% of the tax on actual income.
3. The IT department can raid the premises of an individual which it considers a tax defaulter due to concealment of earnings. Under section 271 AAB, a penalty ranging from 10% to 90% could be applicable.
Apart from fine, imprisonment of 6 months to 7 years can also be levied under different sections if the assessing officer finds tax evasion due to misreporting or under-reporting of the income or earnings by an individual. Though the Income Tax department expects salaried employees to file their ITRs by 31 st July of the current assessment year, it gives a few more chances for people to come out and declare income earned in the previous years too.
If you too missed the deadline of 31 st July 2018 to file your ITR and pay Income Tax as applicable, then you can pay up to Rs.5000 Income Tax and file your Income Tax Return on or before 31 st December 2018.