CBDT, which is the policy-making body for the I-T department, said the mechanism will help concerned taxpayers avoid the additional burden of interest on default and deferment of advance tax.
The central board of direct taxes (CBDT) has proposed a self-reporting mechanism for reporting estimates of current income, tax payments and advance tax liability by taxpayers who are required to get their account audited under the Income Tax Act, 1961. According to the draft rules, a taxpayer needs to 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 in the newly proposed form. Further, 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 previous year by an amount of Rs 5 Lakh or 10%, whichever is higher, then the assessee will be required to explain the reasons for the same by January 31 of the previous year, the CBDT said. “There is an added responsibility on the assessee to justify if the advance tax liability of current year is less than the preceding year. 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,” Shalu Kedia, associate director, Nangia & Co said. Kedia said while tax policy was surely moving towards transparency, additional compliance on India Inc may not go down well, when the corporates are already struggling with the GST and Ind AS compliance. The CBDT, which is the policy-making body for the I-T department, said the mechanism will help concerned taxpayers avoid the additional burden of interest on default and deferment of advance tax. “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.