Direct taxes 1 ( UNIT-5 Assessment procedure )
Procedure For Assessment
Filing Of Return Of Income : Every person whose total income during the previous year exceeds the minimum taxable limit, shall, on or before the due date, furnish his return of income in prescribed form. The due date for a company and where audit is required, is 30th september of the assessment year. In all other cases the due date is 31st july of the assessment year.
Permanent Account Number : The dept issues a permanent account number (PAN) to every assessee. It is meant to identify the returns and is always used in all notices, challans and correspondence.
Interest For Default in furnishing the return : If the return of income is either not filed or filed after due date the assessee shall be liable to pay simple interest @ 1% per month for the period from the due date to the date of filing the return or, if no return is filed, to the date of best judgement assessment. The interest shall be charged on the amount of tax on income returned less (i) advance tax paid, (ii) Tax deducted and collected at source , (iii) double taxation relief, (iv) tax credit to a company regarding MAT.
Assessment Of Income
Assessment means computation of total income and determination of tax payable. Assessment can be of the following types :
(1) Self - Assessment
(2) Assessment on the basis of return
(3) Regular Assessment by Assessing officer
(4) Re- assessment
(5) Precautionary or Protective Assessment
(1) Self - Assessment : If any tax and / or interest is payable on the basis of the return of income after taking into account the advance tax paid and tax deducted at source etc., the assessee shall first pay such tax and/ or interest and fee, if any, then file the return along with the proof of such payment, i.e., challan for payment. This is called self - assessment.
(2) Assessment on the basis of return : After the return is filed an intimation is sent to the assessee for paying any sum remaining payable. Such intimation shall be deemed to be an order of assessment on the basis of return. If the assessee has been excess tax it will be refunded.
The assessing officer must send intimation for any tax, etc., due from the assessee on the basis of the return within one year from the end of the financial year in which the return is filed.
(3) Regular Assessment by Assessing Officer : It means the assessment made on the basis of evidence or best judgement assessment u/s 144 . In the first type of assessment notice u/s 143(2) has to be issued for furnishing evidence in support of the return and inquiry is made before assessment. The second type of assessment is made when the assessee does not file the return at all. It is again of two kinds- compulsory and discretionary. In a best judgement assessment the assessing officer should really base the judgement on his best judgement. He must make what he honestly believes to be fair estimate of his income. Compulsory best judgement assessment is made if the assessee has failed to file his return or has failed to comply with a notice u/s 142(1) or 142(2A) or 143(2). Discretionary best judgement assessment is made when the assessing officer is not satisfied about the correctness of the accounts of the assessee or if no method of accounting has been regularly employed by tbe assessee.
Assessment made u/s 143 or 144 has to be completed within 21 months from the end of the relevant assessment year in which the income was first assessable.
(4) Re- Assessment : If the assessing officer has reason to believe that any income chargeable to tax has escaped assessment, he may assess or re- assess such income. For making re- assessment and assessment has to be re-opened u/s 147.
( 5) precautionary or protective Assessment : Where it is not clear as to who has received the income, the assessing officer can commence proceedings against any or all of them to determine as to who is responsible to pay tax.
Rectification : If an income tax authority discovers any mistake apparent from record in the order passed by him, he may rectify it within 4 years from the end of the financial year in which the order sought to be rectified was passed.
------------------------------------------------------------------------------------
Collection and recovery of tax
The government collects income tax as under :
(1) Deduction of tax at source
(2) Collection of tax at source
(3) Advance payment of tax
(4) Payment of tax on self- assessment , and
(5) Notice of demand
(1) Deduction of tax at source : The deduction at source means that the person responsible for making payment of certain incomes to the income earners deduct income tax at the prescribed rates on such incomes before payment is made to them . The amount so deducted shall be deposited by the deductor in the govt. treasury within the prescribed time limit. The tax so deducted is called deduction of tax at source.
The following types of income are subjected to deduction of tax at source :
1. Salaries
2.payment of recognised provident fund
3. Interest on securities
4. Dividends
5. Interest other than 'interest on securities'
6. Winnings from lottery or crossword puzzles etc.
7. Payment under a life insurance policy.
8. Payment in respect of rent.
9.payment of compensation on acquisitio ofccertain immovable property.
10. Payment of N.S.S
(2 ) Collection of tax at source on profits and gains from the business of trading in alcoholic liquor, forest produce, etc.
(A) Every seller shall, at the time of debiting the account of the buyer( a resident of india or a domestic company ) by the amount payable by him or at the time of receipt of such amount from the buyer, which ever is earlier, collect from the buyer of any goods of the nature specified below, a sum equal to the % specified below, of such amount as income tax :
1. Alchoholic liquor for human consumption ---------1%
2. Tendu leaves-------5%
3. Timber obtained under a forest lease ------2.5%
4. Timber obtained by any mode other than under a forest lease-------2.5%
5. Any other forest produce ( not being timberor tendu leaves)-------2.5%
6. Scrap------1%
7. Minerals, being coal or lignite or iron ore ------1%
However, if the aforesaid goods are purchased by a buyerd who is resident in india) for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes, the tax shall not be collected by the seller . For this purpose he has to furnish a declaration in duplicate in the prescribed form to the seller .
The seller shall deliver to the prescribed authority one copy of the declaration upto 7th day of the month next following the month in which the declaration is furnished to him.
Retail vendors are not buyers u/s 206c, no TCS to be collected from them.
(B ) Every person , who grants lease or a license or transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry to anotjer person for business purposes shall also collect tax at source.
The tax shall be collected at source at the time of debiting the amount payable in the account of the licensee or lessee or at the time of receipt of such amount from him in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
1. Parking lot-------Rate of tax 2 %
2. Toll plaza-------2%
3. Mining and quarrying------2%
(3 ) Advance payment of tax : Advance payment of tax or ' pay as you earn ' scheme means that assessee has to pay tax simultaneously along with the earning of his income. This tax is paid on the current years income in the same year. In fact, it is paid as advance and it is called ' Advance payment of tax '.
Condition of laibility to pay advance tax : Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year , as computed in accordance with the provisions of advance tax, is rupees 10,000 or more.
Recovery of tax : Any amount, other than advance tax, specified as payable in a notice of demand shall be paid within 30 days of the service of the notice ; but where the assessing officer has any reason to believe that it will be detrimental to revenue if the full period of 30 days is allowed he may direct that tbe sum specified in tbe notice of demand shall be paid even earlier than 30days.
If the amount specified in the notice of demand is not paid within the period stated in the notice , the assessee shall be laible to pay simple interest @ 1 % per month from the date of the expiry of the aforesaid time.
Where the amount of demand has been reduced in appeal, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded.
Where the amount of demand subsequently is increased, the assessee shall be laible to pay interest from the day immediately following the end of the period mentioned in the first notice of demand and ending with the day on which the amount is paid.
Where interest is charged on failure, to deduct tax or collect tax at source or its payment for any period , then no interest shall be charged u/s 220(2) on the same amount for the same period.
The arrears of tax, interest, penalty, fine etc., can be recovered by the following modes :
(1) Certificateto tax recovery officer : When an assessee is in default in making payment, the tax recovery officer will draw up a statement specifying the amount of arrears due from the assessee and shall proceed to recover the said amount by
(a) attachment and sale of the assessee's movable and /or immovable property;
(b) arrest of the assessee and his detention in prison; and
(c) appointing a receiver for the management of his properties.
2. Other modes of recovery : Other modes of recovery are
(a) Attachment of salary
(b) from the court
(c) by sale of movable property
(d) through the state govt
(e) recovery of tax pursuance of an agreement with foreign govt.
Filing Of Return Of Income : Every person whose total income during the previous year exceeds the minimum taxable limit, shall, on or before the due date, furnish his return of income in prescribed form. The due date for a company and where audit is required, is 30th september of the assessment year. In all other cases the due date is 31st july of the assessment year.
Permanent Account Number : The dept issues a permanent account number (PAN) to every assessee. It is meant to identify the returns and is always used in all notices, challans and correspondence.
Interest For Default in furnishing the return : If the return of income is either not filed or filed after due date the assessee shall be liable to pay simple interest @ 1% per month for the period from the due date to the date of filing the return or, if no return is filed, to the date of best judgement assessment. The interest shall be charged on the amount of tax on income returned less (i) advance tax paid, (ii) Tax deducted and collected at source , (iii) double taxation relief, (iv) tax credit to a company regarding MAT.
Assessment Of Income
Assessment means computation of total income and determination of tax payable. Assessment can be of the following types :
(1) Self - Assessment
(2) Assessment on the basis of return
(3) Regular Assessment by Assessing officer
(4) Re- assessment
(5) Precautionary or Protective Assessment
(1) Self - Assessment : If any tax and / or interest is payable on the basis of the return of income after taking into account the advance tax paid and tax deducted at source etc., the assessee shall first pay such tax and/ or interest and fee, if any, then file the return along with the proof of such payment, i.e., challan for payment. This is called self - assessment.
(2) Assessment on the basis of return : After the return is filed an intimation is sent to the assessee for paying any sum remaining payable. Such intimation shall be deemed to be an order of assessment on the basis of return. If the assessee has been excess tax it will be refunded.
The assessing officer must send intimation for any tax, etc., due from the assessee on the basis of the return within one year from the end of the financial year in which the return is filed.
(3) Regular Assessment by Assessing Officer : It means the assessment made on the basis of evidence or best judgement assessment u/s 144 . In the first type of assessment notice u/s 143(2) has to be issued for furnishing evidence in support of the return and inquiry is made before assessment. The second type of assessment is made when the assessee does not file the return at all. It is again of two kinds- compulsory and discretionary. In a best judgement assessment the assessing officer should really base the judgement on his best judgement. He must make what he honestly believes to be fair estimate of his income. Compulsory best judgement assessment is made if the assessee has failed to file his return or has failed to comply with a notice u/s 142(1) or 142(2A) or 143(2). Discretionary best judgement assessment is made when the assessing officer is not satisfied about the correctness of the accounts of the assessee or if no method of accounting has been regularly employed by tbe assessee.
Assessment made u/s 143 or 144 has to be completed within 21 months from the end of the relevant assessment year in which the income was first assessable.
(4) Re- Assessment : If the assessing officer has reason to believe that any income chargeable to tax has escaped assessment, he may assess or re- assess such income. For making re- assessment and assessment has to be re-opened u/s 147.
( 5) precautionary or protective Assessment : Where it is not clear as to who has received the income, the assessing officer can commence proceedings against any or all of them to determine as to who is responsible to pay tax.
Rectification : If an income tax authority discovers any mistake apparent from record in the order passed by him, he may rectify it within 4 years from the end of the financial year in which the order sought to be rectified was passed.
------------------------------------------------------------------------------------
Collection and recovery of tax
The government collects income tax as under :
(1) Deduction of tax at source
(2) Collection of tax at source
(3) Advance payment of tax
(4) Payment of tax on self- assessment , and
(5) Notice of demand
(1) Deduction of tax at source : The deduction at source means that the person responsible for making payment of certain incomes to the income earners deduct income tax at the prescribed rates on such incomes before payment is made to them . The amount so deducted shall be deposited by the deductor in the govt. treasury within the prescribed time limit. The tax so deducted is called deduction of tax at source.
The following types of income are subjected to deduction of tax at source :
1. Salaries
2.payment of recognised provident fund
3. Interest on securities
4. Dividends
5. Interest other than 'interest on securities'
6. Winnings from lottery or crossword puzzles etc.
7. Payment under a life insurance policy.
8. Payment in respect of rent.
9.payment of compensation on acquisitio ofccertain immovable property.
10. Payment of N.S.S
(2 ) Collection of tax at source on profits and gains from the business of trading in alcoholic liquor, forest produce, etc.
(A) Every seller shall, at the time of debiting the account of the buyer( a resident of india or a domestic company ) by the amount payable by him or at the time of receipt of such amount from the buyer, which ever is earlier, collect from the buyer of any goods of the nature specified below, a sum equal to the % specified below, of such amount as income tax :
1. Alchoholic liquor for human consumption ---------1%
2. Tendu leaves-------5%
3. Timber obtained under a forest lease ------2.5%
4. Timber obtained by any mode other than under a forest lease-------2.5%
5. Any other forest produce ( not being timberor tendu leaves)-------2.5%
6. Scrap------1%
7. Minerals, being coal or lignite or iron ore ------1%
However, if the aforesaid goods are purchased by a buyerd who is resident in india) for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes, the tax shall not be collected by the seller . For this purpose he has to furnish a declaration in duplicate in the prescribed form to the seller .
The seller shall deliver to the prescribed authority one copy of the declaration upto 7th day of the month next following the month in which the declaration is furnished to him.
Retail vendors are not buyers u/s 206c, no TCS to be collected from them.
(B ) Every person , who grants lease or a license or transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry to anotjer person for business purposes shall also collect tax at source.
The tax shall be collected at source at the time of debiting the amount payable in the account of the licensee or lessee or at the time of receipt of such amount from him in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
1. Parking lot-------Rate of tax 2 %
2. Toll plaza-------2%
3. Mining and quarrying------2%
(3 ) Advance payment of tax : Advance payment of tax or ' pay as you earn ' scheme means that assessee has to pay tax simultaneously along with the earning of his income. This tax is paid on the current years income in the same year. In fact, it is paid as advance and it is called ' Advance payment of tax '.
Condition of laibility to pay advance tax : Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year , as computed in accordance with the provisions of advance tax, is rupees 10,000 or more.
Recovery of tax : Any amount, other than advance tax, specified as payable in a notice of demand shall be paid within 30 days of the service of the notice ; but where the assessing officer has any reason to believe that it will be detrimental to revenue if the full period of 30 days is allowed he may direct that tbe sum specified in tbe notice of demand shall be paid even earlier than 30days.
If the amount specified in the notice of demand is not paid within the period stated in the notice , the assessee shall be laible to pay simple interest @ 1 % per month from the date of the expiry of the aforesaid time.
Where the amount of demand has been reduced in appeal, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded.
Where the amount of demand subsequently is increased, the assessee shall be laible to pay interest from the day immediately following the end of the period mentioned in the first notice of demand and ending with the day on which the amount is paid.
Where interest is charged on failure, to deduct tax or collect tax at source or its payment for any period , then no interest shall be charged u/s 220(2) on the same amount for the same period.
The arrears of tax, interest, penalty, fine etc., can be recovered by the following modes :
(1) Certificateto tax recovery officer : When an assessee is in default in making payment, the tax recovery officer will draw up a statement specifying the amount of arrears due from the assessee and shall proceed to recover the said amount by
(a) attachment and sale of the assessee's movable and /or immovable property;
(b) arrest of the assessee and his detention in prison; and
(c) appointing a receiver for the management of his properties.
2. Other modes of recovery : Other modes of recovery are
(a) Attachment of salary
(b) from the court
(c) by sale of movable property
(d) through the state govt
(e) recovery of tax pursuance of an agreement with foreign govt.
Comments
Post a Comment