Many happy returns... Only if you file by Dec 31

Many happy returns... Only if you file by Dec 31

TEAM TOI

02.02.2021

From the compliance point of view, the Budget seems to offer many pluses for the taxpayer. But, if you scratch beneath the surface, it does seem to be a mixed bag.

Let’s begin with the sting in the fine print of the finance bill. The time-limit for belated or revised returns (to correct any errors) is shorter, and these can now be filed three months before the end of the relevant assessment year, or before the completion of the tax assessment, whichever is earlier. Let us look at a case study.

For a salaried taxpayer, the date of filing his I-T return for the financial year ending March 2021will be July 31, 2021. The belated or revised return — which could earlier be filed by March 31, 2022 — now have a deadline of December 31, 2021, or before completion of assessment. whichever is earlier.

“The reduction of such time-limits will impact taxpayers whose returns are due by October 31 (businessmen who need to get their audits accounted) or November 30, for companies having significant international transactions. Typically, mistakes in the original returns are discovered only after a few months. Not complying with the requirement by these dates could attract severe consequences — penalty for nondisclosure of income, besides potential prosecution,” says Gautam Nayak, tax partner at CNK & Associates.

Coming to tax-audit requirements. Currently, if the turnover of a businessman exceeds Rs 1 crore, the books of accounts are required to undergo a tax audit. The FM, in her speech, pointed out that she had increased the limit to Rs 5 crore for those who carry out 95% of their transactions digitally. To give a further push, this compliance turnover threshold is now increased to Rs 10 crore.

Gautam Nayak, tax partner at CNK & Associates, says it is a positive move. “However, for informal businesses having a larger number of transactions in cash, the limit is still unchanged at Rs 1crore; this should have been enhanced to at least Rs 2 crore,” states Nayak.

A dispute-resolution committee is proposed to be set up to reduce litigation for small taxpayers. Anyone with a taxable income of up to Rs 50 lakh and disputed income of up to Rs 10 lakh can approach this committee, the proceedings of which shall be faceless. The exact contours will be notified later.

JUMBO HURDLE TO CROSS