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 satishsardanagpur@gamail.com)
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Yes, Satish ji has given a very good solution. The Govt. should consider it. I also request ICAI to forward his views to FM in the Pre-budget Memorandum.
Dear sir your suggestion is appreciable but what can we do than Return Form is not available at the month of August
Dear Sir,
Sept. Last week all the CAs will be busy with attending AGM, moreover this year Auditors attendance is must. Most of the AGM is videographed, even for the PVT LTd., company, how can the CAs get time to sign.
Practically, other than the big companies, all small companies not updating the accounts on day to day basis.
We make a law, whenever, the Officals surprisingly visited the place, books of account not maintaiend upto date, there must be a clause for penalty (in KVAT 2013 provision is there)
But, your approach is valueable one.
The suggestion is very good. It is on the lines of penalty by ROC. This will encourage assessees to give details to auditors in time. Moreover it is becoing impossible to ask clients for the details when the accounts are submitted in time. In addition to the fees for late filing, penalty proceedings may also be initiated so that the clients will have to explain the reason for the delay in submitting the details to the auditors.
Very Good Suggestions, I agree
I agree, this is a good option, nice.
VERY GOOD SUGGESTION IN MY OPINION
I think this is a very good suggestion.
Particularly in case of small assesses and private limited companies there are no
knowledgeable accounts staff also and CAs have to do the work from root level, because after signing the accounts he carries lot of responsibilities.
thanks and regards.
THE TRY OUT SUGGESTED IN THE ARTICLE WILL SURELY EASE THE WORK OF PROFESSIONAL ,ASSESSES AND DEPARTMENT WHILE GENERATING THE REVENUE TO GOVT. PRESENTLY EVERYONE TRY TO SHOOT ANYTHING IN THE SITE BEFORE 12.00 OF MIDNIGHT OF LAST DATE TO AVOID THE PENALTY AND IF SCRUTINY COMES THEY SETTLED WITH LESSER AMOUNT WITH DEPARTMENT OFFICIALS.
VERY GOOD SUGGESTION IN MY OPINION
process of Selection of more cases for scrutiny (percentage wise) for late filers as against early filers can also work.
A good proposal sir but, “No scrutiny of I T returns if Tax Audit Return is filed before 30th June and Income shown is higher than previous year.”
Not Possible practically. It encourages tax evasion.
Dear Mr. Satish
Your ideas are very good and seems practical. But unfortunately our govt is not practical, when they will upload the requisite ITR Forms so late, how we can file returns on time. They are habitual of revising the forms at the last moment. Cant they decide it before the start of new financial year ?
Due date for furnishing of audit report should be extain up to 31st october, 2015 since the due date of filing of income tax return has been extain by CBDT.
today also ITR form No.6 in excel utility is not opening on the site of the Income Tax because of some error and the CBDT wants that the return should be filed in time.
Penalty should be collected from Govt/FM/CBDT for late notification @100/- per day & credited to the tax payers’ account if he files the return within due date. The same should be through automatic process.
Sir, I want to be positive….I agree on all counts….but will the Income tax department will come to our response….tell me if you feel that all assessee’s would meet the dealine be excluded from scrutiny…on what counts….giving the ITR’s in April….may technical problems….assesses are ahead of the IT sleuth…. better be prepared for the worst
I would like to suggest that law may be ammend to fix time limit should fixed from date of notification of forms by CBDT instead of date. If forms are notified on first day of aprill then from that date six month if not it should be extend to such number of days . This will enforce the CBDT TO notifiy earyly instead of present procedure to notify in july.other wise please cbdt extension
the date up to 31.10.2015
I would like to suggest that law may be ammend to fix time limit should fixed from date of notification of forms by CBDT instead of date. If forms are notified on first day of aprill then from that date six month if not it should be extend to such number of days . This will enforce the CBDT TO notifiy earyly instead of present procedure to notify in july.
We may be ready to file the return and tax audit report but relevant returns / forms should be available.
This thought of practical solution offered is appreciable, we need to press for these sort of amendments. Gradual Penalty and late fees, Certificate of Appreciation, Honor of Punctuality will encourage Tax Payers to file the Return at an earliest possible. If is made applicable by CBDT, will resolve so many issues & also save so much of public money & time.
Nice suggestions sir !!!!!
We all are aware of the fact that every month tax payers and CAs / tax consultants are chasing one or the other compliance deadline. Worst is the mon TDS payments and filing quarterly returns… doing the job free of cost for the Government. And if you fail in timely compliance, you have to face interest, penalties, late fees and what not… all for providing free service to the Government! On the contrary, Government should compensate you towards the admin cost you incur.
As regards present demands for extension of due date, I would say CBDT must extend the due date at least by a month.
The CBDT should give clear 183 days for filing tax audit returns. The due date of filing should be issuance of utility + 183 days. There will not be any problem thereafter
Good Suggestions …. Many suggestions are practical and can be implemented.
The issue mainly is for tax audits and loss returns. Interest/penalty for late filers are already in vogue. We all must plan our audit and commence the audits well in advance irrespective of the deadlines.
Sir, in your point 2 (c) “no scrutny if return filed before 30 june and income shown higher than previous year.”
What a joke sir…. Suggested window for fraud…. Plz don’t say anything jst for the sake of saying…
Yes this is a very Good Proposal, Certificate of Appreciation, honor of Punctuality will encourage a Tax Payer to file the Return at an earliest possible.
I disagree with the suggestion that no scrutiny for asseessees whose audit is done before June 30 And showing income more than previous..
This is a foolish suggestion .
ok all are commenting on this issue what about the date for which we are waiting for extension
AGREED……………………..GRADUAL PENALTY
If forms are not available on time then what the use of above suggestions.
Although I agree with progressive concept of penalty
Our Govt. try to collect money by whatever means. In fact penalties is not “good” source of income. The CBDT shall first read Kautilya’s Arthashastra. They treat all businessmen as thief’s. It is the businessmen community which provide jobs to crores of people as per their capabilities. Think if what will be the position of the govt. if it has to provide employment to all those people.
Firstly Income tax department should be ready to accept any returns for filing from 1st April 2015 as against releasing the schema for filing in August.
Then ever body will be ready for filing. No one has excuse on powercuts, but readyness is a big issue.
Suggestion is good keeping in mind the issue cropping up every year
It is not correct. It is high time to bifurcate like Transfer Pricing Audit and Tax Audit and company Audit. It is better if last date for filing returns of non tax auditors should be 31/07 every year. Company audit and Tax audit where turnover less than 15 Crores should be filed before 30/09/2015 if they are not audited under any law.
Rest Tax Audits are to be filed before 31/10/2015 if no transfer pricing transactions are not more than 20 Crores.
30/11 should be for transfer pricing above 20CRs
Hi,
I really appreciate a very practical solution offered CA Satish Sarda and if is made applicable by CBDT, will resolve so many issues & also save so much of public money & time.
Regards
GOOD SUGGESTIONS
Yes. This is very practical solution.
However taking into consideration Rainy season all over the country, Festivals , Power cuts, Floods etc.One should also have thought of Changing Financial year to January to December in line with Globalization this will also reduce stress on accountants in Industry and duplication of MIS reports.
Dear Sir,
I agree with your suggestions however I would like to add one more thing to this :
The penalty amount can also be linked to the tax remain due to pay by the assessee as on the due date. for example if assessee has fully paid the tax before the due date then its just the compliance and procedure which remains pending hence there can be lower penalty for such delays, whereas in case there is self assessment tax is yet to deposit beyond the due date a % of penalty on such tax amount can be given.
thanks,
CA Nilesh Gupta
This is a Good suggestion. But the Penalty be charged not for every day of default which is again very high. This would be taxing and pressurizing after 30th September. Penalty may be Rs. 5000.00 per month or part of month and in multiples thereof [Any other suggestion please]. Certificate of appreciation from the Department would not add any meaning. All other benefits suggested by Mr. Satish Sarda are appreciable.
Sir,
This is a very practical suggestion and as professionals we need to press for these sort of amendments. Penalties should be progressive and not back-breaking.
Good suggestion.
more suggestions :
01. penalty should not be levied uptill march instead charge interest as charging u/s 234A /B/ and C. i.e 1 to 2 % p.m. on profit not on tax.
02. carry forward of loss should be allowed irrespective of the filing date.
03. last date of filing of audit report will be 31st march. Then can not file and penalty should be levied as it it today.
04. return can only be filed if audit report has been filed. so interest starts on both the report and return.
Dear CA Satish Sarda
one of the reason for seeking time in most years is seeking information , which are not available easily with smaller organisations:
fix the due date reasonalby :
keep 30 th sep for corporates
keep 30th Nov for non corporates.
Scrap the penalty
instead seek additional interest on the tax payable .
Many a time the small assessees are affected and they deserve more time as they are not conversant with requirements of Act . even to get a Statement of Account from Corporates it takes longer time.
The proposal to levy a penalty of Rs. 200 is harsh than the present one.
I would like to suggest that law may be ammend to fix time limit should fixed from date of notification of forms by CBDT instead of date. If forms are notified on first day of aprill then from that date six month if not it should be extend to such number of days . This will enforce the CBDT TO notifiy earyly instead of present procedure to notify in july.
I truly appreciate Mr.Satish Sarda’s thought process, in terms of incentivising early filers. Somehow, we all are trained in our system on penalty, fines and punishment for non compliance or delayed compliance of any legal matter. If our system starts recognising and rewarding the entities who regularly and promptly comply with statutory matters, with quantitative and qualitative incentives, that will automatically make every one turn their heads towards compliance. This is an in-principle change that we need to bring into our system. Details and specifics can keep evolving.
VERY GOOD PROPOSAL , just & equitable
yes satish sir u r corect