CBDT removes arrest and imprisonment as prescribed route for tax recovery
CBDT has amended Rule 225 to remove arrest and imprisonment as a prescribed route for recovering tax dues. Authorities can still attach and sell movable or immovable property and appoint receivers. The amendment does not remove any separate arrest powers that may exist elsewhere under the Income-tax Act.
The Central Board of Direct Taxes (CBDT) has removed the use of arrest and imprisonment as means to recover unpaid income tax, as part of significant changes to the enforcement of tax arrears under the new Income-tax Rules. The CBDT issued a notification on Thursday, deleting the provision that allowed for the arrest and detention of tax defaulters in prison, along with subsequent procedural measures related to such actions.
Tax authorities can still employ other recovery methods, such as the attachment and sale of movable and immovable property, as well as the appointment of a receiver. This change does not eliminate the power of arrest that may exist under other provisions of the Income-tax Act. The amendments to Rule 225 include the removal of arrest-related provisions and a reference to arrest in the provision for police assistance.
Furthermore, valuers are now subject to a more detailed disclosure and conflict-of-interest regime. Individuals seeking registration as valuers must now provide extensive information about their qualifications, professional experience, and valuation work, including assets valued or assignments undertaken in the past three years, using the revised Form 169. Registration is required separately for each asset class, covering a wide range of assets from land and buildings to securities and works of art.
The tax department has granted valuers and authorized income-tax practitioners an additional six months, until March 31, 2027, to complete their transition to the registration framework under the new Income-tax Act. This balance aims to protect taxpayers from more coercive measures while ensuring tax authorities retain effective mechanisms for recovering legitimate tax dues, according to Amit Maheshwari, managing partner of AKM Global, a tax and consulting firm.
He noted that the revised Form 169 for valuer registration brings greater structure and transparency to the process, outlining crucial details such as qualifications, experience, asset class, and eligibility.
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