The 20 per cent payment rule challenging a tax order is consistent with the Central Board of Direct Taxes guidelines and not part of a statute.
When the money market dries up and businesses struggle, what does the taxman do? It tries to figure out a way to inch towards a punishing tax target that the government has set by giving businesses and businesses — the prime taxpayers — a little breathing space.
Read Also: New debit, credit card rules
Mumbai, which accounts for the country's highest income tax contribution, is testing this out.
Tax commissioners in financial capital decided on Monday to allow "deserving" assessees to pay in instalments the amount they are required to fork out after challenging a tax demand order, amid tight liquidity and a tough business environment.
After receiving a request order from the Income Tax (I-T) assessing officer, a tax payer must pay 20 percent of the demand within one month of the order being challenged before the first appealing authority, the Income Tax (Appeals) Commissioner. This amount can be paid till the end of March in multiple installments.
"Nevertheless this will be on a case-by-case basis and is not part of any rule. Instructions have been given to commissioners in Mumbai to consider genuine evaluation requests so that they don't have to pay the whole 20 percent at one go. Depending on the case, the payments can occur in three or five or six instalments, "a senior tax officer told ET.
The tax demands relate to the assessment year 2017-18 (or the financial year 2016-17 when all Rs 500 and 1000 rupee currency notes were demonized by the government of Narendra Modi). Before December 31, 2019, the I-T department issued a flurry of notices, raising tax demand, when appraisals for FY 2016-17 became time-barred.
The department questioned the authenticity of deals resulting in an increase in cash deposits with banks after currency bills had been demonetised.
"This is a tiny relief given assessment liquidity positions. There's no sacrifice on revenue, "the official said. While tax officials said this may not have been the first time that installment payments were allowed, tax professionals felt the department appeared to be somewhat considerate this year— probably due to a sluggish growth in demand.
The 20 per cent payment rule challenging a tax order is consistent with the Central Board of Direct Taxes guidelines and not part of a statute. While the appeal ruling before the IT Commissioner's (CIT) appeals may take a long time to come, the 20 percent payment must take place soon after a month.
Assessees may try to buy some time by writing to the assessing officer (AO) in the first place. Once the AO rejects the request, which is typically immediate, the assessee may move the chief commissioner followed by the chief commissioner. Normally, where a request is pending before a higher authority, any action will be taken by the lower authority.
But such tax administration applications can help the taxpayer delay the payment of 20 percent by just a few weeks. While some think the department may offer a time-saving installment mechanism, I feel it is driven primarily by the current business climate, "a tax practitioner said.
Read Also: Sarkari Naukri Bumper recruitments
Comments