Quick Summary
The provisions for tax and penalty determination under the currently applicable Section 73 (Nonfraud cases) and Section 74 (Fraud cases) are proposed to be replaced by a new Section 74A for the financial year 2024-25. Sections 73 and 74 will now only apply to matters related to the financial year 20
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FAQ :
Budget 2024 introduces a new Section 74A, which will replace Sections 73 (non-fraud cases) and 74 (fraud cases) for determining tax and penalties from the financial year 2024-25 onwards. This consolidates both types of cases under a single section.
Yes, Sections 73 and 74 will continue to apply to matters related to the financial year 2023-24. Section 74A is only for cases from the financial year 2024-25 onwards.
Under Section 74A, a notice can be issued within 42 months from the due date of filing the annual return for both fraud and non-fraud cases. An order must be issued within 12 months from the date of issuing the notice, with a possible extension of six months.
For non-fraud cases under Section 74A, if tax and interest are paid before the notice, there's no penalty. If paid within 60 days of the notice, there's no penalty. Otherwise, the penalty is 10% of the tax or Rs 20,000, whichever is higher. Section 73 had different timelines and a 10% penalty or Rs 10,000.
For fraud cases under Section 74A, if tax and interest are paid before the show cause notice, the penalty is 15% of the tax. If paid within 60 days of the notice, it's 25%. If paid within 60 days of the order, it's 50%. If these periods lapse, the penalty is 100% of the tax.
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