How to Report Tax Evasion in India

There are myriad reasons people evade paying their taxes. The ways that people find to evade their taxes are numerous as well. The Central Board of Direct Taxes (CBDT) has an e-portal designed to encourage citizens to report and halt tax evasion. This article is about how to report tax evasion in India. 

The Ministry of Finance, in an official statement,  said “Taking another step towards e-governance and encouraging participation of citizens as stakeholders in curbing tax evasion, the Central Board of Direct Taxes has launched an automated dedicated e-portal on the income tax e-filing website of the Department to receive and process complaints of tax evasion, foreign undisclosed assets as well as complaints regarding benami properties”.

What is Considered Tax Evasion?

The Income Tax Act defines some actions as tax evasion. Let’s take the example of someone claiming depreciation on premises utilized for domestic reasons or claiming depreciation even when the company has no assets. It is merely a dishonest method of avoiding tax obligations. The primary behaviors that are considered to be tax evasion include the following:

1. Hiding earnings

2. Making an exorbitant expense claim

3. Falsifying financial records

4. Financial statements that are incorrect

5. Failing to report income

6. Keeping money outside of the nation

7. Making fictitious tax returns 

8. Using fake paperwork to claim exemption

Tax Evasion Complaint Online

So how do I report tax evasion In India? Or how to inform the income tax department about black money? 

On the Department’s e-filing website, the Central Board of Direct Taxes has established a dedicated online e-portal to receive and handle tax evasion claims, foreign hidden properties, and Benami property complaints.

CBDT Complaint

A link under the heading “File complaint of tax evasion/undisclosed foreign asset/benami property” on the Department’s e-filing website, https://www.incometaxindiaefiling.gov.in/, now allows the general public to submit a Tax Evasion Petition. Both current PAN/Aadhaar holders and those without a PAN/Aadhaar are able to file complaints through this feature.

What exactly does the term “benami” mean? The Hindi word “Benami” means “no name” or “without name.” Benami transactions or property are those in which a person’s real name is not used, but is substituted with the name of another person or a made-up person.

Steps to Report Tax Evasion

Step 1: Go to the Department of Income Tax’s website.

Step 2: Enter the credentials to log in.

Step 3: Select “File complaint of benami property/undisclosed foreign asset”

Step 4: The OTP  was sent to your registered mobile number. Enter it, after a validation procedure based on an OTP.

Step 5: Submit your grievance

In the event of infractions of the Benami Dealings Act, the Black Money Imposition Taxes Act, and the Income-tax Act of 1961,  enter the information in the three primary forms intended for that use. the Department will give each complaint a unique number.  After it has been successfully submitted,  the complainant can check the status online.

Penalties for Tax Evasion

If someone is found guilty of avoiding taxes or evading them, the income tax agency may apply a number of penalties. Companies that either fail to record and pay their own taxes or fail to deduct taxes at source as required may also be subject to these fines.

These Include:

• if income is not stated, collecting 100 to 300 percent of the tax.

• The assessing officer may apply a penalty amount for failure to pay the required tax, but it cannot be greater than the amount of taxes that are owed.

• A penalty of Rs. 200 may be assessed for each day that tax statements are not submitted if they are not submitted within the stipulated time frame.

• The penalty can range from 100 percent to 300 percent of the amount of tax due if someone has concealed information about their income or any taxable fringe benefits.

• A fine of Rs. 25,000 may be imposed if an individual or business fails to maintain their accounts as required by section 44AA.

• A fine of Rs. 1.5 lakhs or 0.5 percent of the company’s sales turnover, whichever is less, may be assessed if a company fails to have itself audited or fails to give a report of such audit.

• A punishment of Rs. 1 lakh may be assessed if an accountant’s report is not given as required.

• The penalty could be the payment of the tax owed if an organization doesn’t deduct tax when it should during payments.

What is the Difference Between Tax Exemptions and Evasions?

Technical phrases like tax exemption, tax planning, tax avoidance, and tax evasion can be quite difficult for the average individual to understand. Taxpayers may not fully benefit from these government provisions if they have little or no understanding of these key terminology. These terms include tax evasion and tax planning. Tax planning and tax evasion are easily distinguishable from one another. Tax planning is the process of deciding how to spend or invest your money in order to lower your tax liability. It aids in lowering your overall taxable income. Tax evasion, on the other hand, is a dishonest way to avoid paying taxes. 

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