Karnataka Tax on Profession, Trades, Callings and Employments (Amendment) Act, 2023 notified; provisions slated to gain effect from 1st April, 2023

The Government of Karnataka has notified the Karnataka Tax on Profession, Trades, Callings and Employments (Amendment) Act, 2023 (‘2023 Amendment’) with a view to further amend the Karnataka Tax On Profession, Trades, Callings And Employments Act, 1976 (“Principal Act”). The 2023 Amendment will gain effect from 1st April, 2023.

Key Highlights:

1. From 1st April, 2023, while assessing escaped tax, if the authority assesses that the escape from assessment was owing to wilful non-disclosure of information or attempt at evading the tax by the employer or the person direct such employer or the person to pay, a penalty equal to one hundred per cent of the tax so assessed will have to be paid in addition to the tax assessed. The rate of penalty presently does not exceed one and a half times of the tax assessed;

2. Default in payment of tax deducted beyond ten days after the specified period, the interest to be paid will be one and a half percent of the amount of tax due for each month or part thereof for a period for which the tax remains unpaid as opposed to 2% starting from 1st April, 2023;

3. From 1st April, 2023, on failure to deduct or to pay tax, the liability to pay simple interest at the rate of one and a half per cent of the amount of the tax due for each month or part thereof for the period for which the tax remains unpaid as opposed to the present one and a quarter percent;

4. On failure to make payment of any amount of tax within the required time or date, the penalty to be imposed from 1st April, 2023 will be equal to 10% of the amount of tax due as opposed to the present position where the penalty imposed is a maximum of 50% of the amount due;

5. Further, the 2023 Amendment substitutes the Schedule of the Act which prescribes the Rates of tax on professions, trades, callings and employments.

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 Source: Parliamentary Affairs and Legislation Secretariat of Karnataka