Quick Summary
The government has proposed a comprehensive rationalisation of prosecution provisions under the Income-tax Act, 2025. The amendments aim to decriminalise minor offences, reduce excessive imprisonment, and make punishments proportionate to the gravity of tax offences. Chapter XXII of the Income-tax Act, 2025 currently contains stringent criminal provisions, prescribing rigorous imprisonment ranging from three months to seven years for a wide range of offences such as falsification of books, non-
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FAQ :
The main goal is to rationalise prosecution provisions, decriminalise minor offences, reduce excessive imprisonment, and ensure punishments are proportionate to the gravity of tax offences.
The maximum prison sentence for many offences is proposed to be limited to two years, reduced from the current seven years. For subsequent offences, the maximum is reduced to three years.
For amounts of tax evaded not exceeding ten lakh rupees, the proposed punishment is a fine only.
Yes, certain offences related to failing to pay tax deducted at source (TDS) for winnings from lotteries, crossword puzzles, online games, and virtual digital assets are proposed to be fully decriminalised.
The amendments to the Income Tax Act 2025 will take effect from the 1st day of April, 2026.
Yes, the nature of punishment is proposed to be changed from rigorous imprisonment to simple imprisonment wherever it was previously prescribed.
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