Almost each year due to one and other reason tax consultants or tax payers demand extension of due date for filing Tax Audit Report under section 44AB of The Income Tax Act 1961 and Income Tax Return under section 139 of The Income Tax Act 1961.
Reason for this demand is mainly due to heavy penalty leviable on non compliance i.e. 0.5% or Rs.150000 whichever is less.
I here in below suggest a practical solution to above difficulty being faced by all the stakeholders:
1) Instead of a steep penalty under section 271B there should be a gradual late fees for example Rs.200 per day starting from 1st October.(subject to maximum of Rs.200000 )
2) Early filers should be given incentives like:
a) No scrutiny of I T returns if Tax Audit Return is filed before 30th June and Income shown is higher than previous year.
b) Certificate of Appreciation can also be given to Returns filed within due date.
c) Refunds if any should be given priority.
Benefits of above solution:
1) Above measures will encourage timely compliance
2) Punctuality will be honored.
3) Late filers will be penalized as per quantum of delay
4) Auditors will not be overloaded in last days so Audit quality can be maintained
5) A relatively equitable distribution of assessments for Department
6) Department server will not be overloaded on last days
7) Genuine cases will not be steeply penalized
8) No rush to Banks for deposit of Tax on last days
I hope my solution which is based on actual experience will benefit all the stakeholders.
(Author is a Practicing Chartered Accountant and can be reached at firstname.lastname@example.org)