DECRIMINALISING SECTIONS IN I-T LAWS

• The Union Budget 2023-24 will include steps to decriminalise taxation laws, remove provisions in the Income Tax, Goods and Services Tax (GST) and Customs laws that are similar to sections that can be invoked under the Indian Penal Code (IPC),
• And reduce ‘prohibitive’ compounding charges under GST, a senior finance ministry official said.
• The compounding provisions in GST, which entail penalties from 50% to 150% of the tax amount involved, make it “impossible for anybody to pay”, said Vivek Aggarwal, Additional Secretary in the Department of Revenue.
• As a result, “there has been zero compounding in India till now for all cases filed under the GST Act,”.

‘Becomes affordable’

• That is being relooked at so that it becomes affordable and compounding becomes a better or a first choice for a taxpayer,. “
• Government is looking at raising the threshold limits (for deeming offences as criminal) in GST, and removing provisions that are overlapping with the IPC so that they become simpler as the GST gets streamlined.

Reviewing thresholds

While the thresholds for considering tax evasion a criminal offence were also being reviewed under the Income Tax and Customs laws, sections of the IPC that deal with obstructing officers performing their duty and failing to respond to summons for documents, for instance, need not be replicated in tax laws, he indicated.

 Aim to cut discretion

• While some criminal provisions in the tax laws were compoundable, the government was examining the level of compounding that was happening and the extent of discretion being exercised by officers so as to make the process more objective.
• After examining this, we have come to a conclusion that the compounding regime had to be made simpler and discretion had to be reduced.
• Government can increase the thresholds for declaring a particular act as a crime and we can look at removing those sections in those Acts which are actually a duplication

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT