Voluntary reporting of estimated current income and advance tax liability

CBDT in a Press Release Dat­ed 19.09.2017 has described the Need of Vol­un­tary Reo­prt­ing of esti­mat­ed income and advance tax lia­bil­i­ty pro­ce­dure pro­posed to insert­ed in Income Tax Rules 1962.

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 per­cent or more. This inter­est is levied as per the pro­vi­sions of sec­tion 234B of the Income-tax Act, 1961 (“the Act”). 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. This inter­est is levied in accor­dance with the pro­vi­sions of sec­tion 234C of the Act.

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.

Need­less to say, 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 pri­or­i­tiz­ing the Gov­ern­ment expenditure.

In order to address these con­cerns, it is pro­posed to cre­ate a mech­a­nism for self-report­ing of esti­mates of cur­rent income, tax pay­ments and advance tax lia­bil­i­ty by cer­tain tax­pay­ers (com­pa­nies and tax audit cas­es) on vol­un­tary com­pli­ance basis. The pro­posed report­ing mech­a­nism is sought to be cre­at­ed by way of insert­ing a new Rule 39A and Form No. 28AA in the Income-tax Rules, 1962. The pro­posed draft noti­fi­ca­tion has been placed in pub­lic domain on the web­site of Income Tax Depart­ment (www.incometaxindia.gov.in) for invit­ing com­ments from stake­hold­ers and gen­er­al pub­lic. The com­ments and sug­ges­tions on the draft Rule and Form may

be sent elec­tron­i­cal­ly at the email address dirtpl4@nic.in by 29th Sep­tem­ber, 2017.

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