Taxman jail defaulters now while recovering tax

The government has abolished the practice of detaining tax defaulters in prison to recover unpaid income tax, marking a significant shift in enforcement methods under the new Income-tax Rules. The Central Board of Direct Taxes (CBDT) issued a notification on Thursday that not only removes the provision for arresting tax defaulter and imprisoning them, but also the subsequent rules governing such actions.

Tax authorities are still able to employ other recovery methods, such as seizing movable and immovable property and appointing receivers. However, this amendment does not eliminate any separate arrest powers that may exist under the Income-tax Act. The changes also introduce a more rigorous disclosure and conflict-of-interest regime for valuers.

Individuals seeking registration as a valuer must now provide extensive details about their qualifications, professional experience, and valuation work, including assets valued or assignments undertaken in the past three years, using the revised Form 169. Each asset class requires separate registration. Valuers and authorized income-tax practitioners are given six more months, until March 31, 2027, to transition to the new registration framework under the new Income-tax Act, aiming to balance taxpayer protections with maintaining effective tax collection mechanisms.