Companies and taxpayers getting their accounts audited will be required to submit income estimates and tax liabilities for six months of the financial year to the income tax department by November 15, in a move aimed at keeping a close check on flow of revenue,
according to a draft notification issued by the Central Board of Direct Taxes (CBDT).
It has sought stakeholders' comment by September 29 on filing of Form 28AA by giving details of income and advance taxes paid. Also, businesses have to specify reasons for any reduction in advance tax payments compared with the preceding financial year.
This information will help the tax department get an idea about the entity's income trend on an almost real-time basis.
Where the total income has declined by Rs. 5 lakh or 10%, whichever is higher, compared with the preceding fiscal year, the tax payer will have to furnish a similar statement of income and tax liability for the April-December period by January 31. Under
the present mechanism, taxpayers have to only pay advance tax to CBDT on income tax payable for the full fiscal in four instalments by June 15, September 15, December 15 and March 15. They need not provide the department income estimates. “It is proposed to
create a mechanism for self-reporting of estimates of current income, tax payments and advance tax liability by certain taxpayers viz. companies and tax audit cases, on voluntary compliance basis,“ CBDT said. It plans to insert Rule 39A in the Income Tax Rules
making it mandatory for companies and assessees who have to get their accounts audited to submit Form 28AA, giving details of income and tax paid. “An assessee being a company and a person, to whom the provisions of section 44AB are applicable shall furnish
an intimation of estimated income and payment of taxes as on September 30 of the previous year, on or before November 15 of the previous year,“ said the draft notification.
If the estimated income on September 30 of the previous year is less than the income of the corresponding period of the immediately preceding year by Rs. 5 lakh or 10%, whichever is higher, then the assessee would be required to furnish an intimation of
estimated income and payment of taxes as on December 31, CBDT added. A continuous flow of tax revenue throughout the year is critical for the government to meet various budgetary allocations such as welfare schemes, infrastructure development and defence expenditure.
“A reliable and advance estimate of tax revenues for the year would also provide much-needed perspective for planning and prioritising government expenditure,“ CBDT said in a statement. A taxpayer liable to discharge part of its tax liability by way of advance
tax has to bear the additional burden of interest for default of advance tax, in case total advance tax paid for the year falls short of the assessed tax by 10% or more. Such taxpayers are further liable to pay interest for deferment of advance tax, in case
any quarterly instalment of advance tax paid falls short of the prescribed percentage of total advance tax paid. - www.economictimes.indiatimes.com [20-09-2017]