CBDT issues Norms for Compounding of Offences under Direct Tax Law, 2019 [Read Guidelines]

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The Central Board of Direct Taxes ( CBDT ) has issued a detailed guidelines for compounding offences under the direct tax law replacing the old guidelines issued in the year 2014.

The guidelines, issued on Friday have exclusion provisions, under which, offences done under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Act, 2015, the Benami Transactions (Prohibition) Act, 1988 cannot be compounded in normal cases. This includes money laundering cases. Compounding means that the authorities agree to not prosecute offenders in return for a consideration.

The latest guidelines classify offences into three categories. The first category of offences open to compounding include defaults under tax deducted or collected at source, failure to file return. The second category of offences, for which compounding will not be allowed, deal with willful evasion of tax, removal or concealment or transfer or delivery of property to thwart tax recovery in a search operation.

The guidelines specifically stated that the compounding of offences is not a matter of right and can be invoked on satisfaction of certain conditions prescribed in it.

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