The revised guidelines issued by the Income Tax (I-T) department have made serious offences under the black money and benami laws generally non-compoundable. It means that an individual or an entity would not be able to get away by just paying the tax demand, penalty and interest, under the new Income Tax rules. The new Income Tax rules will kick in from June 17. It will be applicable to all cases for compounding received on or after this date.
The Central Board of Direct Taxes (CBDT) has directed its senior officers to circulate the revised guidelines for compliance. It also listed 13 cases where offences are not to be generally compounded under the new Income Tax rules.
The offences have been grouped in two categories. Group A includes failure to pay tax deducted at source under Chapter XVII-B, tax payable under Section 115-0, or failure to pay the tax collected at source.
Group B includes offences of wilful attempt to evade tax, false statement in verification and failure to produce accounts and documents.
The first category offences in the new Income Tax rules are open to compounding while the rest aren't. However, if the individual or entity makes a Category A offence on more than three occasions then it will not be generally compounded.
The revised guidelines also dictate that any offence that has any bearing on any offence under the Black Money and Imposition of Tax Act, 2015 will not be generally compounded. Additionally, any offence under the Benami Transactions (Prohibition) Act, 1988 would not merit compounding.
Moreover, any case at any stage including enquiry or filing of FIR, under investigation by the Enforcement Directorate, CBI, Lokpal, Lokayukta and any other central or state agency are not to be normally compounded.
CBDT said, "Notwithstanding anything contained in these guidelines, the Finance Minister may relax restrictions in Para 8.1 for compounding of an offence in a deserving case, on consideration of a report from the Board on the petition of an applicant."