There is always an increment in the complexity of taxation and its allied regulation. The general perception is that the role of a tax advisor is restricted to advise on reduction of tax liability only. But it is imperative to understand that a professional tax advisor can be hired to provide the entire set of services, starting from optimal tax advice, creation of a cost-effective structure, especially in a cross-border transaction, apart from maintaining accurate papers, filing the papers before the revenue authorities, and appearing before them for assessment and appellate proceedings.
A tax advisor is an individual tax-payer?s face to the revenue authority. Imagine a situation where initially a tax advice is obtained, but no assistance is taken from a professional tax advisor on further steps, leading to situations like either the income tax-return not being submitted on time or it being done without maintaining appropriate documents or records.
This could also prompt revenue authorities to deny the claim, as it was not substantiated with relevant information or documents at the assessment stage, dragging the tax-payer into undue litigations, resulting in loss of additional time and adding to the cost, apart from penal interest and penalties.
A tax advisor is a key person for maintaining and updating your documents. Proper guidance from a tax advisor would also ensure that documents are maintained as per the information reported in a return. Further, in case of returns under which claim for a refund is made, it is imperative to take the assistance of the tax advisor to ensure that the eligible refund is issued within time.
In the era of globalisation, an international assignment, deputation or any investment by an individual can lead to a scenario where taxes may be required to be paid in two or more countries. Expert advice can possibly help make the transaction economically viable. Thus, it is important to obtain a complete tax advice to ensure appropriate taxes are paid and the required documents, for example, assignment/deputation letter, are maintained right from the beginning. This ensures that the expert services of a tax advisor are utilised not only for proper documentation and compliance, but also for creating optimum tax effects.
Moreover, you may be aware that the law of income tax is never stable and it is always subject to some modifications, contradictory case laws, circulars and notifications.
An expert tax advisor will always keep track of such changes and utilise his services right from start till the end. This will ensure that you do not get a shock in the end.
The writer is director, Tax, Ernst & Young. Views expressed are personal