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Informist, Sunday, Feb. 1, 2026

 

--BUDGET: Propose to rationalise prosecution framework under Income Tax Act 

--BUDGET: To rationalise prosecution under Income Tax Act 

--BUDGET: To decriminalise non production of books of accounts under Income Tax 

--BUDGET: Moot immunity from prosecution on non-disclosure of some foreign assets 

 

NEW DELHI – The Union Budget for 2026-27 (Apr-Mar) Sunday imposed penalties for non-reporting or giving inaccurate information of statements regarding transactions on crypto assets. This is to ensure compliance with Section 509 of the Income Tax Act, 1961, which relates to furnishing of information in respect of a transaction of a crypto-asset.

 

A penalty of INR 200 per day for non-furnishing of statements and INR 50,000 for furnishing inaccurate particulars and failure to correct such inaccuracy will be levied, said Finance Minister Nirmala Sitharaman, while presenting the FY27 Budget in the Lok Sabha. Last year, the Central Board of Direct Taxes had identified undisclosed income worth INR 8.89 billion from virtual digital assets, which include cryptocurrency and other non-fungible tokens stored, invested and traded in blockchain.

 

Further, the government has rationalised the prosecution framework under the Income Tax Act while maintaining a careful balance for deterrence in some serious offences. Non-production of books of account and documents, and requirement of tax deducted at source payment, where payment is made in kind, are being decriminalised, said the government. Moreover, minor offences will attract fines only, it added.

 

The remaining prosecutions will be graded commensurate with the quantum of offence, said the government, They will entail only simple imprisonment, with the maximum imprisonment reduced to two years, and power to courts to convert even those into fines, the government said. In cases where presently the maximum punishment is two years, the quantum of punishment has been reduced to six months with or without fine and with no minimum imprisonment, said the government.

 

The prosecution for offences under the Income Tax Act, 2025 shall be based on the amount of tax evaded and the punishment shall be proportionate to the gravity of the crime, said the government. In such cases, the requirement of maximum punishment of imprisonment has been done away with, and the requirement of mandatory fine has also been made optional, it said. Further, for minor offenses, only a fine needs to be furnished, said the government.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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