Taxpayers can now revise audit reports

The new rule makes it easier for taxpayers who are required to file tax audit reports to claim this deduction

Businesses and professionals can now revise their tax audit reports, with the Central Board of Direct Taxes (CBDT) on Friday introducing new rules to iron out procedural hurdles in claiming deductions for certain spending.

In cases where the taxpayer makes certain payments such as taxes, duties, or cess or provident fund contribution of employees after the tax audit report has been submitted in an assessment year, a revised audit report signed by the accountant can be given to claim relief for that spending or payment, CBDT said in a notification.

The Income Tax Act disallows certain spending such as interest, royalty, or fee for technical services as a deduction while computing the taxable income of an assessee if the tax is not deducted at source and paid to the government. Also, spending such as provident fund contribution and leave encashment are allowed as an expenditure only in the year that it is spent.

If any of the payments are made after the tax audit report has been filed, a recalculation of the extent of the spending eligible as a deduction from taxable income may become necessary. The new rule makes it easier for taxpayers who are required to file tax audit reports to claim this deduction. This eliminates the need for the taxpayer to explain the mismatch between an audit report and the claim for deduction. The new rule is a relief in terms of administrative process more than a relief in terms of substantive law but is in line with the government’s efforts to make it easier to do business. “The notification allows revision of the tax audit report till the end of the relevant assessment year. It removes an administrative difficulty and streamlines the procedure for claiming certain deductions while computing taxable income,” said Pranav Sayta, national leader, international tax and transaction services at EY.

Businesses with sales of 1 crore or more and professionals with income more than 50 lakh have to file tax audit reports. However, firms having up to 5 crore sales need not file tax audit reports if they do not deal more than 5% of their receipts and spending in cash.

This article is auto-generated by Algorithm Source: www.livemint.com

Report

RELATED:  GameStop short sellers are still not surrendering despite nearly $20 billion in losses this month

Leave a Reply

Your email address will not be published. Required fields are marked *

GIPHY App Key not set. Please check settings