If you are from India If you live in, it is necessary to pay tax. Whether you earn from business or have a job, if you have tax liability, you will have to pay it. Paying taxes not only increases the national revenue, but many types of benefits are also provided to the taxpayers by the government. At the same time, there is a provision for financial punishment, penalty, interest recovery and even legal action for evading or not paying tax. Taxpayers in India get the option to choose between two income tax regimes. Old Tax Regime and New Tax Regime. Each regime has its own rules and tax slabs, allowing one to choose the best option as per their financial circumstances. Let us know what action can be taken against you if you do not pay tax.
This action can be taken for not paying tax
Penalty for late filing (Section 234F): Penalty is imposed for not filing income tax return by the due date. If your total income exceeds ₹5 lakh, the penalty is ₹5,000. The penalty is ₹1,000 for income up to ₹5 lakh. Interest at the rate of 1% per month is charged for delay in filing Section 234A return.
Notice from Income Tax Department (Section 156): The Income Tax Department can issue a demand notice under Section 156, which requires the outstanding amount to be paid within a specific time frame. Ignoring these notices may result in legal action.
Penalty for tax evasion (Section 270A, 276CC): Tax evasion, whether intentional or unintentional, attracts severe penalties. For furnishing wrong information of income, a penalty of 50% to 200% of the underreported tax can be imposed under Section 270A.
Asset Seizure: In case of persistent non-compliance of income tax notices, the Income Tax Department can seize assets like property and vehicles to recover the outstanding amount.
Financial reputation and travel restrictions: Non-payment of taxes can have a negative impact on your credit score and make it difficult to obtain loans or credit in the future. In severe cases, the Ministry of External Affairs may revoke passport issuance, restricting international travel.
Trial and imprisonment: In significant cases of tax evasion, a court hearing is possible, which can result in imprisonment from three months to seven years along with heavy fines.
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