Companies and taxpayers who have to get their accounts audited will be required to submit their income estimates and tax liability for six months of the financial year to the I-T department by November 15.
The Central Board of Direct Taxes (CBDT) has come out with a draft notification seeking stakeholders' comment on filing of Form 28AA by giving details of income and advance taxes paid.
Also, businesses have to specify reason for any reduction in advance tax payment compared to preceding financial year.
This information will help the tax department to get an idea about the trend of income of the entity on an almost real time basis.
Also in cases where the total income has declined by Rs 5 lakh or 10 per cent, whichever is higher, compared to preceding fiscal then the tax payer will have to furnish a similar statement of income and tax liability for April- December period by January 31.
Under the present mechanism, taxpayers have to only pay advance tax to the CBDT on income tax payable for the full fiscal in four instalments-- June 15, September 15, December 15 and March 15. They need not provide the I-T department estimates of income.
"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," the Central Board of Direct Taxes (CBDT) said in a draft notification.
The CBDT plans to insert Rule 39A in the Income Tax Rules wherein companies and those assessees who have to get their accounts audited will have 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 on which CBDT has invited stakeholder comments by September 29.
If the income estimated as 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 per cent, 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 revenues throughout the year is critical for the government so as to meet various budgetary allocations such as welfare schemes, infrastructure development, defence expenditure etc.
"A reliable and advance estimate of tax revenues for the year would also provide much needed perspective for planning and prioritising the Government expenditure," the CBDT said in a statement.
A taxpayer who is liable to discharge part of its tax liability by way of advance tax has to bear 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 ten per cent 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.
"It is of utmost importance for such taxpayers to arrive at a reasonably accurate estimate of their current income and advance tax liability, so that the additional burden on account of interest for default/deferment of advance tax can be avoided," the CBDT said.
Nangia & Co Associate Director Shalu Kedia said current advance taxes is paid based on estimated income and interest is levied for any shortfall in the payment of advance tax liability at the time of filing return of income.
"Considering that the final computation of income at the close of the financial year may vary significantly from the estimates filed for six months/nine months, the variance could become a matter of discussion during the assessment proceedings," Kedia said.
We are surely moving fast towards tax transparency, but additional compliance on India Inc may not go down well, when the corporates are already struggling with GST and Ind-AS (Indian Accounting Standard) compliance, she added.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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