DTC Procedures
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Transcript of DTC Procedures
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Direct Taxes Code Bill, 2009Procedural aspectsBy Prof. (Dr.) Paresh ShahF.I.C.W.A.,Ph.D.(Finance).,F.D.P.(IIMA)
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Intent of DTC
Intent of Intent of DTCDTC
Reducing scopeof litigation
Single Codefor all direct
taxes
Flexibility
Elimination of regulatoryfunctions
Consolidationof provisions
Use of simple
language
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What's in for Assessment procedure?
DTC aims to better tax compliance,reduce compliance costs and lower
administrative burden.
The Code seeks to achieve this byconsolidation of the procedure relating
to filing of tax base returns, assessmentand appeal proceedings
Some of the provisions introduced bythe Code could possibly result in an
increase in compliance and thereforeneeds to be represented
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Return of income
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Return - key changes
F iling of return by political parties and Non-profit organizations made mandatory
TP accountant report to be filed with TPO (currently with AO)
Stop-filer / non-filer concept introduced
Concept of return of tax bases introduced in place of return of income toconsolidate income tax, wealth tax and dividend distributions
Non-resident assessees may not be able to claim exemption from filing thetax returns for income earned from interest etc. which has been subject to
appropriate withholding
Concept of assessment year and previous year done away with and financialyear brought in
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Returns- timelines
Due date for filingof return
3 0 September: (a) Companies;(b) a person or working partner of a firm required to have hisaccounts audited
31July
:Others
31 August : In cases other than thosementioned below.
3 0 June : If the person is not a companyand does not derive any income frombusiness.
Defective return Assessee must rectify defect inreturn within 15 days of suchintimation or
W ithin such further period as the
AO may allow.
Time limit increased to 3 0 days W aiver of time period by AO not
envisaged
Time limit for filingrevised/belatedreturn
Before the expiry of one year fromthe end of relevant assessmentyear; OR
Before completion of assessment;whichever is earlier.
21 months from end of relevant financialyear; or
Before completion of assessment;whichever is earlier
[Time limit reduced by 3 months]
Particulars Existing Proposed
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Assessments andRe-assessments
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Assessment- timelines
Time-limit for serving scrutinynotice
Six months from the end of thefinancial year in which return isfurnished.
Four months from end of financial year inwhich :
return is furnished;return is treated as invalid;notice of section 151 /152 wasissued.
Time limit for completion of assessment (for non-TPO referredcases)
Within
21months from the end of the assessment year in which the
income was first assessable
Within
21months from the end of thefinancial year in which the return was filed
[No change in time limit]
Time limit for completion of assessment (for TPO referred
cases)
W ithin 33 months from the end of the assessment year in which theincome was first assessable.
(a) After the expiry of the period of 4 2 months; OR
(b) 3 months from the end of the month in
which TPO report is received
whichever is later.
Particulars Existing Proposed
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Assessment proceedings other key issues
Rectification application to be disposed off within two years from end of financialyear. Deemed rejection if application for rectification remains un-disposed for 6months
Situations where orders deemed to be prejudicial to interest of the revenuedefined
TPO can independently decide whether a specific case needs to be scrutized;reference of AO not required
Alternate remedy of approaching CIT with respect to orders prejudicial to theinterest of the assessee do not find place in the DTC
Any notice sent through post/ courier will be deemed to be served on the 5 thday after the day on which such notice was sent
Scrutiny to be made in accordance with risk management strategy of theB oard and shall be absolutely confidential
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Assessments by DRP - a welcome change
AOforwards
assessmentorder draft
AO AssesseeFiles an
objection
AOpasses
thefinal
Order
No
DRPissues
direction
Yes
AOpasses
thefinal
Order
Issue of demandnotice
CIT(A)
ITAT
The scope of Dispute Resolution Mechanism extended to alltaxpayers where the variation proposed to the returned
income is more than Rs 2 5 lakhs
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Reassessments
Time period for the issue of noticeunder section 1 48 : 4 / 6 years.
Reason dont accompany noticeissued under section 1 48.
Notice (along with reasons) shall be issued:
a) for 7 financial years immediately preceding the financial year in which thesearch and seizure operation has been carried out or the material hasbeen obtained; and
b) within 7 years from the end of the relevant financial year in any other case.
Deemed cases of escaped assessment - new entries :
Assessment has not been made in accordance with any decision,p rejudicial to the assessee , rendered by :
i. ITAT, NTT, HC or SC in the case of the assessee or any other personunder this Code, the Income-tax Act, 19 61 ; or
ii. a court in the case of the assessee or any other person under any other law.
Computation or assessment has not been made in accordance with anyorder, direction, instruction or circular issued by the B oard.
Available instructions/directions of higher authorities not considered by AOat time of earlier assessment.
Reassessment pursuant to objection raised by CAG Audit.
Existing Proposed
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Appeals
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APPEALS
Commissioner of Income Tax (Appeals) [CIT(A)]Appealable order before the CIT(A) can be :
- any order passed by any income tax authority below the rank of theCommissioner
- an intimation issued by the department
CIT (A) can consider and decide on any matter not considered by AO implying :- matters not arising out of assessment proceedings can now be considered by
CIT(A)- matters suo-moto raised by CIT(A) even if not raised by assessee
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APPEALS
ITATL ist of appealable orders have been simplified
Indicative time period for deciding the appeal reduced to 2 years from 4 years
Order pursuant to direction of DRP appealable only by assessee
High court appeal process substituted by NTT
HIGH COURT / National Tax Tribunal
Appeal to NTT against ITATs order.
Orders of the NTT can be appealed against in the Supreme Court.
The powers and functions of the NTT and the procedure before it shall be as setout in the NTT Act, 2005 .
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Penalty Proceedings
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Penalty
Default Penalty under the Act Penalty under the DTC
U nder reporting of tax base / penaltyfor concealment
100 to 3 00 percent of the tax onconcealed income
100 to 200 percent of the tax onunder reported tax base
F ailure to maintain the prescribedbooks of account and documents for a financial year
INR 25 ,000
and2 percent of the value of the
international transaction
INR 50 ,000 to INR 200 ,000
F ailure to get the accounts auditedor obtain the tax audit report
0 .5 percent of the total salesINR 100 ,000 , whichever is less
INR 50 ,000 to INR 200 ,000
F ailure to obtain / furnish TP reportfrom accountant
INR 100 ,000 INR 50 ,000 to INR 200 ,000
F ailure to deduct or pay tax atsource
Amount equal to tax not deducted or paid
25 to 100 percent of the taxdeductible
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Tax Administration
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Way forward
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Way forward
The DTC proposes significant changes to the current tax systems
Taxpayers would need to assess impact of some of the proposals ontheir current structures and business models
Need to integrate tax into business decision process and vice versamore important than ever
Business community needs to watch developments and activelyengage with government for presenting business point of view.
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Stop filer/ non-filer
E xisting Proposed
Parallelprovisions arethere for issue of notice under section 1 42 (1 )for furnishingreturn of Incomeetc.
Stop F iler (Section 151 ): in relation to a financial year means a person who hasnot furnished a return for the financial year but has
(a) furnished a return for the immediately preceding financial year; or (b) been assessed for the immediately preceding financial year; or (c) not furnished a return in response to a notice served under section 151 for the immediately preceding financial year.
Non F iler (Section 152 ): in relation to a financial year means a person
(a) who has not furnished,-
(i) a return of tax bases for the financial year; and(ii) a return of tax bases for two immediately preceding financial years; and
(b) who has not been issued any notice under section 151 in respect of therelevant financial year and two immediately preceding financial years.
Notice to Stop filer and Non filer : W ithin 21 months from end of relevant financialyear.
Return to be filed : W ithin 3 0 days of the receipt of the notice.
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