Finance
By: Shree1news, 03 APR 2021
Businesses and professionals can now revise their tax audit reports, with the Central Board of Direct Taxes (CBDT) on Friday introducing new guidelines 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 might be given to assert relief for that spending or payment, CBDT mentioned in a notification.
The Income Tax Act disallows certain spending such as interest, royalty, or fee for technical services as a deduction whereas computing the taxable income of an assessee if the tax isn’t 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’re 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 however is according to 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 process for claiming certain deductions whereas computing taxable income,” mentioned 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 need to file tax audit reports. However, firms having up to ₹5 crore sales needn’t file tax audit reports if they do not deal more than 5% of their receipts and spending in cash.
Source:A-N
