Tax evasion has always been a criminal offence in India. Few know that this can even land you in jail. Persecution in any related offence can come under Chapter XXII of the Income-tax Act, 1961.
Under this act, 3-6 months of rigorous jail will be given to offenders under these cases:
- Failure to file timely return of income
- False statement and verification
- Wilful attempt to evade tax
- Fabrication of accounts and documents
- Failure to deposit tax deducted or collected at source
The following will attract a fine plus jail of 3-6 months. Also, anyone found helping the tax payer in evading tax will be punished:
- Removal, concealment, transfer or delivery of property to thwart tax recovery
- Failure to afford necessary facilities for the officers during search operations are some more offences
- Abetment of false return
In case of a Hindu United Family, the head of the family is held as an offendor until he proves that the evasion was done without his knowledge. The same holds true for company directors.
However, there are a few exceptions in the law if the offendor is below the age of 18.
Here are a few other instances, where you may be given a jail of a maximum term of 7 years or slapped with hefty penalty:
Not mentioning PAN or quoting incorrect PAN: If the PAN number is not mentioned at the time of employment, the salary will attract a higher TDS of 20%, instead of 10%. If the PAN is incorrect, a penalty of Rs 10,000 may be slapped.
Not checking Form 26AS before filing: All the expenses borne in the last year are mentioned in this form. The form can be available online or be provided by the bank. Any mismatch in the details can lead to severe punishment. Similar punishment will be levied mismatch in income and expenses and investments.
Not filing return if income is above 2 lakhs: If the gross taxable income before deduction under any section is more than 2 lakhs, it is mandatory to file a return. If this is not filed, a penalty of 300% will be levied on the outstanding tax. Even if there is no tax liability, you have to file the return if the gross income before various deductions is more than the basic exemption limit.
Avoiding TDS by misusing Forms 15G and 15H attracts a penalty of Rs 10,000. Not declaring the previous employer's income and the tax deducted by the firm should be mentioned clearly in form 26AS. You can be levied a penalty of 300% if the tax is evaded.
Some of the other penalties include not responding to notice from tax department.