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For greater compliance, Centre cuts penalties on indirect tax

Section 11AC of the Excise Act has been amended for similar cases and the taxpayer can now pay the duty along with a penalty of 10 per cent of the duty.

Written by Shruti Srivastava | Ahmedabad/new Delhi, New Delhi |
March 2, 2015 1:41:44 am

In an attempt to encourage voluntary tax payment and reduce litigation, the government has relaxed the provisions regarding penalties in indirect taxes including service tax, excise and customs.

With regards to the customs duty payment, the Budget 2015-16 has said that in instances which do not involve fraud or willful mis-statement with the intention of evading payment of taxes, no penalty would be imposed if the taxpayer pays the duty and the interest on it within 30 days from the date of receipt of notice.

The proceedings initiated against the taxpayer by the department would also be deemed to be concluded. Section 28 of the Customs Act has been amended to this effect.

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Section 11AC of the Excise Act has been amended for similar cases and the taxpayer can now pay the duty along with a penalty of 10 per cent of the duty or Rs 5,000 which is higher within 30 days of issue of show-cause notice and all proceedings will also be deemed concluded. Experts said that the move is aimed at improving compliance and making doing business trade-friendly. “This has been done to improve tax compliance and ensure voluntary payments.

Even in cases of frauds, the department wants to encourage taxpayers to pay and get the proceedings dropped. This will help hugely in reducing the litigation for the department,” Manish Mishra, executive director, Mazars Advisory Pvt Ltd, said.

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