If you live in India , it is necessary to pay tax. Whether you earn from business or job, if you have tax liability, you have to pay it. Paying tax not only increases national revenue, but many benefits are also provided to taxpayers by the government.
At the same time, there is a provision of financial penalty, penalty, interest recovery and even legal action for tax evasion or non-payment. Taxpayers in India get the option to choose between two income tax regimes. Old tax regime and new tax regime. Each system has its own rules and tax slabs, so that a person can choose the best option according to his 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): Failure to file income tax returns by the due date attracts a penalty. If your total income is more than ₹5 lakh, the penalty is ₹5,000. For income up to ₹5 lakh, the penalty is ₹1,000. Section 234A Interest is charged at the rate of 1% per month for delay in filing 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 (Sections 270A, 276CC): Tax evasion, whether intentional or unintentional, attracts severe penalties. Misrepresentation of income attracts a penalty ranging from 50% to 200% of the underreported tax under Section 270A.
Property Seizure: In case of repeated non-compliance of income tax notices, the income tax department can seize assets such as property and vehicles to recover the outstanding amount.
Financial reputation and travel ban: Not paying taxes can negatively impact 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 imprisonment for anywhere from three months to seven years, along with hefty fines.
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