Under the amended guidelines of the Income Tax Department, those involved in serious crimes under black money and Benami laws will not be able to get away with just fines. The Central Board of Direct Taxes (CBDT), a leading direct tax policy, has issued revised 32-page guidelines for compounding of offenses under direct tax laws, 2019.

  1. Dismissal of income tax crimes is not the right thing. In the Income Tax Language, non-compounding means that the I-T department can file a lawsuit against the tax evader in return for taxes and surcharges payable under section 279 (2) of the Income Tax Act.
  2. Earlier, taxpayers were able to settle the cases of tax evasion just by paying the tax demand, penalty, and interest.
  3. In the context of the facts and circumstances of each case, the Income Tax Department can allow compounding keeping in mind factors like nature of the crime, nature of nature and magnitude.
  4. According to the revised CBDT guidelines, under the serious criminal cases of money laundering, terror financing, corruption, the capture of Benami properties and undeclared foreign property, the crime “will generally be” non-compound.
  5. In the latest guidelines, crimes related to anti-national or terrorist activity related to crime or enforcement directorate (for the crimes under the Prevention of Money Laundering Act, CBI (Prevention of IPC and Corruption Prevention Act), Lokpal, Lokayukta or any other Central related crimes is mentioned. Or the state agency like the local police will also be non-compound “usually”.
  6. CBDT has listed 13 cases where crimes are not usually compounded.
  7. After receiving a report from the Central Board of Direct Taxes (CBDT), the Union Finance Minister will have the sole right to relax these guidelines in the “eligible case”.
  8. In such cases where the person who sought to reduce the crime under the ICT Act was convicted by the court for two years or more, would come under no compounding category.
  9. The offenses under section 275A, 275B and 276 of the IT Act will not be compounded 
  10. The new guidelines said, the new guideline, which aims to eliminate one step issued in 2014, is to streamline action against the serious cases of black money and criminal tax evasion.