The Central Board of Direct Taxes (CBDT) has relaxed some criminal prosecution norms relating to under-reporting or non-filing of income tax returns and delay in depositing of tax deducted at source in the government exchequer.
CBDT has issued a circular on September 9, where the limits and time period for proceeding with the prosecution in respect of TDS defaults have been set.
As per circular, Cases where non-payment of TDS is Rs 25 lakh or below, and the delay in a deposit is less than 60 days from the due date, shall not be processed for prosecution in normal circumstances.
CBDT has laid down these new criteria to ensure only “deserving cases get prosecuted”.
Finance minister Nirmala Sitharaman had tweeted last month: “I have instructed the revenue secretary to come up with measures to ensure that honest taxpayers are not harassed and those who commit minor or procedural violations are not subjected to disproportionate or excessive action”.
Similarly, CBDT has also relaxed prosecution norms for offences relating to under-reporting or failure in filing the Income-tax return. Where the amount sought to be evaded or the tax on the under-reported income is Rs 25 lakh or below shall not be processed for prosecution except with the previous administrative approval of the collegium of senior officers.
These instances of failure to furnish ITRs are prosecuted under Section 276 (C)(C) of the Income Tax Act, where for such offenses, the imprisonment term can be up to seven years.
Summarized Provisions of Circular:
|Offence||Punishment||New Prosecution norms|
|Failure to deposit TDS||Three years to Six years and Fine (Section 276B)||No prosecution, if quantum is Rs. 25 lakh or less; if delay in TDS deposit is less than 60 days|
|Underreporting of Income||Three months to a maximum of seven years and fine (section 276C(1))||Where the evaded amount of tax on income is Rs. 25lakh or less, approval of collegiums required to initiate prosecution|
|Failure to file Income Tax Return||Three months to a maximum of seven years and fine (section 276CC)||Where evaded amount, owing to non –filing is Rs. 25lakh or less, approval of collegiums required to initiate prosecution|
The income tax norms as announced in the CBDT circular shall “come into effect immediately and shall apply to all the pending cases where a complaint is yet to be filed”.