Businesses and professionals can now revise their tax audit stories, with the Central Board of Direct Taxes (CBDT) on Friday introducing new guidelines to iron out procedural hurdles in claiming deductions for sure spending.
In instances the place the taxpayer makes sure funds reminiscent of taxes, duties, or cess or provident fund contribution of staff after the tax audit report has been submitted in an evaluation 12 months, a revised audit report signed by the accountant will be given to say aid for that spending or cost, CBDT mentioned in a notification.
The Income Tax Act disallows sure spending reminiscent of curiosity, royalty, or charge for technical providers as a deduction whereas computing the taxable revenue of an assessee if the tax shouldn’t be deducted at supply and paid to the federal government. Also, spending reminiscent of provident fund contribution and go away encashment are allowed as an expenditure solely within the 12 months that it’s spent.
If any of the funds are made after the tax audit report has been filed, a recalculation of the extent of the spending eligible as a deduction from taxable revenue might turn out to be crucial. The new rule makes it simpler for taxpayers who’re required to file tax audit stories to say this deduction. This eliminates the necessity for the taxpayer to elucidate the mismatch between an audit report and the declare for deduction. The new rule is a aid by way of administrative course of greater than a aid by way of substantive regulation however is consistent with the federal government’s efforts to make it simpler to do enterprise. “The notification permits revision of the tax audit report until the top of the related evaluation 12 months. It removes an administrative problem and streamlines the process for claiming sure deductions whereas computing taxable revenue,” mentioned Pranav Sayta, nationwide chief, worldwide tax and transaction providers at EY.
Businesses with gross sales of ₹1 crore or extra and professionals with revenue greater than ₹50 lakh need to file tax audit stories. However, companies having as much as ₹5 crore gross sales needn’t file tax audit stories if they don’t deal greater than 5% of their receipts and spending in money.
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