“Section 276CC empowers the government to prosecute and imprison a non-corporate taxpayer if there is a failure to file I-T returns and tax has been evaded through such non-filing. The budget proposes that if the net tax is less than Rs 10,000 then there will be no prosecution. The earlier limit was Rs 3,000,” said Ameet Patel, tax partner at Manohar Chowdhry and Associates.
“In my view, the threshold is too low even after the amendment. Prosecution is a serious step and should be resorted to only in extreme cases. The threshold should be at least Rs 5 lakh of net tax evasion. A welcome step is that the Finance Bill proposes to give credit for all tax payments to arrive at the net figure of tax evaded,” Patel added.
“Currently, only the advance taxes and the tax deducted at source are considered to arrive at the figure of tax evaded.
“The budget proposes to also take into cognisance the self-assessment tax, which is typically paid by the taxpayer prior to filing his return of income, to arrive at the net tax figure. A taxpayer can pay the requisite self- assessment tax before the expiry of the assessment year (say, if his I-T return is due in July end, he can pay this tax by March of next calendar year). This could help reduce the net figure of tax evaded and save him or her from prosecution proceedings,” said Sandeep Bhalla, partner at Dhruva Advisors.