In an effort to give relief to the citizens of India, the Income Tax Department has eased a number of its rules related to compounding of offences under the Income Tax Act. This will enable a person to do his business easily and will also decriminalise tax offenders.
When a person accepts his fault and pays a specified amount to avoid prosecution, this is called compounding.
However, prosecution proceedings can start under Section 276 if the intent is to do fraud and with it remove, hide, transfer or deliver to a person, any property or any interest like this, so that particular property or interest can be detached from recovery of tax.
Now, a person who has been convicted to two years of imprisonment, which was non-compoundable has been made compoundable under the revised guidelines for compounding of offences under the Income Tax Act, 1961.
However, the discretely powers of the competent authority have been restricted. Earlier, the time period for accepting a compounding application was two years, but now, it has become three years as per the revised guidelines since 16th September.
Under several provisions of the Act, a specific upper limit has also been made for the compounding fee covering the many defaults.
Now, the additional compounding charges of the penal interest has been reduced to 1% for a month up to 3 months from 2 % and 2% from 3% per month beyond three months.
