Image Source : FILE PHOTO Representative image
Tax in India: In India, paying a tax is mandatory for all individuals, whether they earn through business or employment. If you have a tax liability, you are required to pay. Tax payments contribute to the national revenue and offer various benefits to taxpayers provided by the government. However, there are provisions for financial penalties, fines, interest recovery, and legal action in case of tax evasion or non-payment. In India, taxpayers have the option to choose between two income tax regimes: the old and new tax regimes. Each regime has its own rules and tax slabs, allowing individuals to select the one that best suits their financial situation. Let’s explore the potential consequences of failing to pay taxes.
What happens if you don’t pay tax in India?
Penalty for late filing (Section 234F): There is a penalty for not filing an income tax return by the due date. If your total income is more than Rs 5 lakh, then the penalty is Rs 5,000. The penalty is Rs 1,000 for income up to Rs 5 lakh. Interest is charged at the rate of 1 per cent per month for delays in filing Section 234A returns.
Notice from Income Tax Department (Section 156): The Income Tax Department can issue demand notices under Section 156, requiring payment of dues within a specified time limit. Ignoring these notices can lead to legal action.
Penalties for tax evasion (Section 270A, 276CC): Tax evasion, whether done intentionally or unintentionally, attracts harsh penalties. Misrepresentation of income can attract a penalty ranging from 50 per cent to 200 per cent of the underreported tax under Section 270A.
Asset seizure: For not complying with repeated Income Tax notices, the Income Tax Department can seize assets such as property and vehicles to recover the dues.
Financial reputation and travel ban: Not paying 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 Foreign Affairs may revoke passport issuance, restricting international travel.
Trial and imprisonment: In significant cases of tax evasion, a court trial is possible, which can result in heavy fines as well as imprisonment from three months to seven years.
Also Read: Anand Mahindra responds to 90 hours work week debate: ‘Can change the world in 10 hours’
Also Read: Delta Autocorp Limited to mark milestone with IPO listing on NSE emerge platform
