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News INCOME TAX

  • Feb 05, 2020
  • Cos to pay stiff penalty for faking expenses

    There’s now a heavy price to pay for a common tax fraud many businesses indulge in. Fake bills to lower profits and evade tax through artificial expenses will attract a stiff penalty from the next financial year.

    Companies caught with false entries in their account books will have to cough up a penalty as high as the total value of such an invoice — over and above the amount of tax it will have to pay.

    “The penalty will now be 100% of the aggregate of the amount of such false or omitted entry, and not on the tax evaded, as per old provisions. Now, the law has a new provision primarily targeted at bogus purchases or capital gains or expenses,” said Priyank Ghia, partner at Chokshi & Chokshi, LLP, a tax and forensics consultancy.

    Earlier, a fake entry of Rs. 10 crore would have led to a total outgo of Rs. 6-8 crore (including tax and penalty); now, it will be Rs. 14 crore (including penalty of Rs. 10 crore).