The question has arisen whether those who earn income above the income tax exemption limit but fail to file their returns will be arrested under the new rules to be implemented in the revision of the Income Tax Act.
While presenting the Budget last July,
Finance Minister Nirmala Sitharaman announced the review of the Income Tax Act She said that a comprehensive study will be conducted to make changes in the old sections according to the current situation.
Nirmala Sitharaman said that the new changes are being made to make the income tax rules easier to understand and to reduce cases, and that taxpayers’ comments are welcome.
Accordingly, an internal committee has been formed by the Central Board of Direct Taxes to review the provisions of the Income Tax Act. Under the current law, anyone who earns income within the income tax limit but knowingly fails to file returns will be prosecuted.
In particular, those who have tax arrears of more than Rs 25,000 and fail to file their accounts may be sentenced to imprisonment for a term ranging from three months to seven years, along with a fine.
However, it is said that this section of the law may be amended as it recommends that those with low tax arrears, senior citizens, women, those earning below the income tax exemption limit, and those who have valid reasons for not filing their accounts should not be prosecuted.
