The Income-tax Bill, 2025, a comprehensive overhaul of the existing Income-tax Act, 1961, proposes significant changes to the legal framework surrounding tax offences and prosecution. The Bill’s Chapter XXII, titled “Offences and Prosecution” outlines a revised set of penalties and punishments for various tax-related transgressions.

Key Offences and Penalties:

The Bill proposes a range of offences and penalties, including:

* Wilful Attempt to Evade Tax:  Individuals who deliberately attempt to evade payment of tax, penalty, or interest will face rigorous imprisonment ranging from three months to seven years, depending on the amount involved. The Bill defines the threshold for higher penalties as exceeding twenty-five lakh rupees.

* False Statements and Declarations:  Individuals who knowingly provide false or misleading information in accounts, statements, or declarations related to taxable income will face imprisonment and fines. The severity of the punishment will depend on the amount of tax evaded.

* Falsification of Books of Account:  Individuals who manipulate or falsify their books of account to evade tax will face imprisonment and fines.

* Abetment of Tax Evasion:  Individuals who encourage or assist others in committing tax evasion offences will face similar penalties as the primary offender.

* Failure to Pay Tax:  Individuals who fail to pay tax collected at source to the credit of the Central Government will face imprisonment and fines.

* Failure to Furnish Returns:  Individuals who fail to file their income tax returns by the prescribed deadline will face imprisonment and fines.

* Failure to Comply with Search and Seizure Orders:  Individuals who obstruct or hinder the authorities during search and seizure operations will face imprisonment and fines.

* Contravention of Orders:  Individuals who violate orders issued under the Income-tax Act, such as those related to the production of documents or the disclosure of information, will face imprisonment and fines.

Enhanced Penalties for Repeat Offenders:

The Bill introduces a provision for enhanced penalties for repeat offenders. Individuals convicted of certain offences under Chapter XXII, who are subsequently convicted again for similar offences, will face a minimum of six months and a maximum of seven years of rigorous imprisonment, along with fines.

Presumption of Culpability:

The Bill introduces a presumption of culpable mental state in certain cases. This means that if an individual is found in possession of assets, books of account, or other documents that suggest tax evasion, the burden of proof will shift to the individual to prove their innocence.

Special Courts for Trial:

The Bill proposes the establishment of special courts for the trial of offences under Chapter XXII. These courts will have exclusive jurisdiction over such cases, ensuring swift and efficient prosecution.

Impact of the New Provisions:

The proposed changes in the Income-tax Bill, 2025, aim to strengthen the legal framework for tax enforcement and deter tax evasion. The introduction of stricter penalties, enhanced punishments for repeat offenders, and the presumption of culpability are expected to increase compliance and reduce tax avoidance. The establishment of special courts will streamline the prosecution process and ensure timely justice.

However, it is crucial to ensure that these provisions are implemented fairly and transparently, protecting the rights of taxpayers while effectively combating tax evasion.