Income Tax Act 1961: Guidelines for Section 281

Section 281: Certain Transfers to Be Void

Section 281 of the Income Tax Act 1961 prohibits taxpayers from transferring their assets to avoid paying taxes.

Guidelines for Prior Permission

To obtain prior permission for a transfer under Section 281, taxpayers must:

• File an application with the Income Tax Officer at least 30 days before the transfer.
• Provide details of the proposed transfer, including the assets involved and the reasons for the transfer.

Determination of Tax

If the transfer is made without prior permission, the taxpayer may face tax on the amount of unpaid tax or other sums.

Conclusion

Section 281 serves as a deterrent against taxpayers attempting to evade their tax obligations. It ensures that taxpayers cannot avoid paying taxes by simply transferring their assets to third parties.