The Central Board of Direct Taxes (CBDT) today released draft Notification for insertion of new rule 39A in the 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. 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.
By Inserting this provision, the CBDT 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.
Accordingly, in exercise of the powers conferred by section 295 of the Income-Tax Act, 1961, an amendment of the Income-tax Rules, 1962 is proposed for insertion of a new Rule 39A and Form No.28AA in the Rules.
The proposed new rule 39A reads as follows;
39A. (1) An assessee being a company and a person (other than a company), to whom the provisions of section 44AB are applicable shall furnish an intimation of estimated income and payment of taxes as on 30th September of the previous year, on or before 15th November of the previous year.
(2) If the income estimated as on 30th September 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 percent, whichever is higher, then the assessee shall be required to furnish an intimation of estimated income and payment of taxes as on 31st December of the previous year, on or before 31st January of the previous year.
The CBDT also invited comments and suggestions of stakeholders and general public on the draft notification. The comments and suggestions may be sent to the email address, dirtpl4@nic.in .
Read the full text of the Notification below.
