On 01.10.2022, the Central Board of Direct Taxes (CBDT), through notification 111/2022, inserted the provision for Application for recomputation of income under sub-section (18) of Section 155 as Rule 132 of the Income Tax Rules, 1962.
Rule 132 is a beneficial provision for the assessees to comply with Section 155, of the Income Tax Act, 1961. The law was clear that tax paid by businesses was not deductible from the total income. It was unclear as to how the surcharge or cess on tax paid was to be treated. However, with the Government’s clarification through the Finance Act, 2022 it was made clear that no deduction can be made as a surcharge or cess levied on tax paid from the taxable profit. The one-time window to pay any such claimed deduction is enabled through Rule 132.
Individuals who make earnings from business or profession who have claimed deduction of cess or surcharge in the previous years will be impacted by the implementation of Rule 132.
The procedure by which Rule 132 works is as given below:
The assessees shall file an application for recomputation of income disallowing surcharge or cess claimed and allowed for the previous years electronically, in Form 69 on or before 31st March 2023.
Form No. 69 shall be furnished electronically to the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or the person authorized by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems).
Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) shall lay down the procedures and standards for furnishing and verification of Form No. 69 and to forward the application received in Form No. 69 to the Assessing Officer.
The Assessing Officer shall, on receipt of the application in Form No. 69, recompute the total income by amending the relevant order and issue notice under Section 156 specifying the time period within which the amount of tax payable, if any, is to be paid–
(i) for the assessment year relevant to the previous year referred to in sub-rule (1); and
(ii) for the assessment years subsequent to the assessment year referred to in clause (i), if the order for such assessment year results in variation in carrying forward of loss or allowance for unabsorbed depreciation or credit for tax under section 115JAA or section 115JD.
The assessee shall, after making the payment of the tax determined under sub-rule (4), furnish the details of payment of tax in Form No.70 to the Assessing Officer within thirty days from the date of making the payment.
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