Now, the government is discussing setting a threshold for the compounding of these cases to avoid prosecution and instead impose penalties

The government is considering decriminalizing certain minor Income Tax offences and replacing prosecution with penalties. This move aims to boost the ease of doing business. Currently, even trivial offensive activities like delayed payment of TDS can lead to criminal prosecution, according to money control.

In June 2020, the Finance Ministry proposed to decriminalize a range of minor offences, including those related to bounced checks and repayment of loans, to assist businesses in overcoming the crisis caused by the coronavirus outbreak.

Later, Prime Minister Narendra Modi ordered bureaucrats to expedite the decriminalisation of minor offences and violations in a letter dated April 4, Cabinet Secretary Rajiv Gauba asked the secretaries to initiate action on certain suggestions made by the prime minister which included reviewing such crimes and accordingly taking action to repeal or amend these provisions in a time-bound manner.

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Now, the government is discussing setting a threshold for the compounding of these cases to avoid prosecution and instead impose penalties. The goal is to promote a more business-friendly environment and enhance the ease of doing business within the first 100 days.

One can be prosecuted under various Sections of the Act and be imprisoned for periods ranging from three months to seven years for delayed payments, but the government is pondering on decriminalising such frivolous offences dwindling the punishment to penalty and fines.

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