Here is the rewritten article in Markdown format:
Tax Evasion: A Growing Concern in India
=====================================
The Indian government has imposed a penalty of INR 100 per day for each day of the default period on individuals and organizations that fail to deduct or pay tax at source (TDS) and collect tax from customers (TCS).
Penalties for Non-Compliance
According to Section 271C, a penalty equal to the amount of tax not deducted or paid will be imposed on failure to deduct or pay any part of the tax. Similarly, Section 271CA levies a penalty equivalent to the amount of tax that should have been collected and paid on failure to collect or pay any part of the tax required under section 206C(1).
The Problem of Tax Evasion
Tax evasion has become a major concern in India, with non-filing of income tax returns being the most common method. Other tactics include:
- Inflating deductions
- Fabricating expenses
- Hiding income through offshore accounts
The estimated tax gap stands at a significant amount, which is the difference between actual revenue collection and potential collection.
Consequences of Tax Evasion
Tax evasion undermines public trust in the government’s ability to ensure a fair and equitable system, leading to cynicism and weakening of the social contract. It also results in lost tax revenue, limiting the government’s ability to invest in essential services like:
- Education
- Infrastructure
- Research
Way Forward
To address this issue, it is essential to overhaul the department’s approach to intelligence and investigation, develop robust tax laws, and strengthen penalties for tax evasion. Additionally, introducing a records locator code can help address the absence of a uniform system of indexing taxpayers.
Conclusion
Tax evasion is a complex issue that requires a multi-faceted approach. Every small contribution makes a huge difference in the growth of the economy. Instead of waiting for change to happen, it is crucial to take proactive steps against tax evasion and support initiatives that promote transparency and accountability.
Read More:
Subscribe to Taxscan Premium for more updates and insights on taxation in India.