Section 478
Section 478: punishment for wilful attempt to evade tax
Section 478 is the Act's core tax-evasion offence - it punishes anyone who wilfully attempts, in any manner, to evade tax, penalty or interest, or to under-report their income, or to evade payment of tax, penalty or interest already determined to be due.
Wilful attempt to evade tax/under-report income - sub-section (1)
If a person wilfully attempts in any manner to evade any tax, penalty or interest chargeable or imposable, or under-reports their income, under the Act, they are punishable under the current text (substituted by the Finance Act, 2026, effective 1 April 2026):
| Amount sought to be evaded / tax on under-reported income | Punishment |
|---|---|
| Exceeds ₹50,00,000 | Simple imprisonment up to two years, or fine, or both |
| Exceeds ₹10,00,000 but does not exceed ₹50,00,000 | Simple imprisonment up to six months, or fine, or both |
| Any other case | Fine only |
Wilful attempt to evade payment - sub-section (2)
Separately, wilfully attempting to evade payment of any tax, penalty or interest already due carries its own, identically-tiered punishment structure (imprisonment up to two years for amounts over ₹50 lakh, up to six months for ₹10-50 lakh, fine only below that).
The punishment under this section is without prejudice to any penalty that may also be imposable under any other provision of the Act - a person can face both this prosecution and a separate monetary penalty for the same conduct.
How this changed
Before the Finance Act, 2026 amendment, both sub-sections carried rigorous imprisonment: not less than six months (extendable to seven years) where the amount exceeded ₹25 lakh, or not less than three months (extendable to two years) in any other case, plus fine. The current structure replaces this with generally lighter simple imprisonment, tiered at different (higher) rupee thresholds.
Frequently asked questions
What is the punishment for wilful tax evasion under the current Act?
Simple imprisonment up to two years (or fine, or both) if the amount evaded exceeds ₹50 lakh; up to six months (or fine, or both) if it's between ₹10-50 lakh; fine only in any other case.
Is under-reporting income treated the same as evading tax outright?
Yes - Section 478(1) covers both wilfully attempting to evade tax/penalty/interest and wilfully under-reporting income, with the same tiered punishment structure applying to both.
Can I face both a penalty and prosecution for the same tax evasion?
Yes - Section 478(3) makes clear the punishment under this section is without prejudice to any penalty imposable under any other provision of the Act.
Related sections
Want this applied to your actual filing, not just explained?
Get help if you're facing a tax evasion notice or prosecutionLast updated 9 September 2026