Income tax on all income other than
agricultural income is levied and collected by the central
government and shared with the states. The provisions relating to
income tax (both the determination of the taxable income and the
administration of the law) are contained in the Income Tax Act 1961
and the Income Tax Rules 1962. The Department of Revenue under the
Ministry of Finance of the central government is responsible for
administering the law and collecting the tax.
Buy Sell Products in Asian Trade Gallery,Online Trading Proposals in
Asia,Buyers Sellers in Asia
Tradehub
Gallery
Product: Perfume Body Glitter ( Roll- on)
Source: Taiwan
Price:USD $ 2 Per Unit
Company: Chase Era Enterprise Co.,Ltd
Product: Cardigan Sweater
Source: South Korea
Price:USD $ 10 Per Unit
Company: DAWOO APPAREL CO.,LTD.
Product: Stainless Steel Agricultural Sprayer
Source: Taiwan
Price:USD $ 50 Per Unit
The accounting year for tax purposes must end on
March 31. Every company is required to file its income tax return for
the accounting period ended March 31 by the following November 30.
Failure to file a return must be filed lon a prescribed preprinted
form, duly verified and signed, siclosing the taxable income, showing
the details of its complutation and enclosing the audited accounts.
In specified cases, the form should also enclose
a lseparate report from the auditors in a prescribed form certifying
various particulars lnecessary for the tax assemssment. A late return
can be filed within two years from the end of the accounting year lor
before completion of the assessment, lwhichever is earlier. However,
failure to file the return by November 30 following the March 31 year
end attract intrests for the period of defalult at the rate of 2
percent per month on the tax liability as finally asessed less advance
tax paid and taxes wihheld. In addition, losses incurred cannot be
carried forward or set off against future profits lunless the return
is filled by that time. A return already filled canbe revised within
two years from the end of the accounting year or before cojmpletion of
assessment, which ever is earlier.
Since the full tax on the basis of the returned
income must be paid before the return is filed the system amount to
one of self-assessment.
As noted above the tax return constitutes a
self-assessment. Generally, the return is accepted. Subject to
adjustments for arithmetical errors and prima facie additions and
deletions, and the shortfall or excess in the tax already paid is
demanded or refunded, respectively. In the event of an adjustment, an
additional income tax equal to 20 percent of the tax on such
adjustment is payable. However, the notice of the shortfall cannot be
sent after three years from the end of the accounting year.
If the assessing officer considers it necessary
to scrutinize the return, a notice calling on the taxpayer to appear
and produce evidence in support of the return must be served on the
taxpayer within one year from the end of the month in which the
return is furnished. In such as case, an assessment order is passed
after detailed scrutiny, determining the income or loss and the sum
payable. The assessment order cannot be passed beyond three years
from the accounting year-end. Cases may be opened or reopened if the
assessing officer has reason to believe that income has escaped
assessment.
Where a scrutiny assessment or reassessment has
already been made, the case can be reopened within four years from
the end of the assessment year in any event, beyond four years but
within seven years if the escaped income is likely to be Rs 50,000 or
more and within ten years if the escaped income is likely to be Rs
100,000 or more. No reopening is possible beyond our years unless the
income has been overlooked because of failure to furnish the return
or to disclose fully and truly all material facts. Where no scrutiny
assessment or reassessment has been made, cases can be opened (e.g.,
where no return is filed) or reopened within four years from the end
of the assessment year in any event and beyond four years upto seven
years if the escaped income is likely to be Rs 50,000 or more. A
reassessment must be completed within two years from the end of the
financial year (i.e., year ended March 31) in which the notice of
opening or reopening is served.
An obvious mistake in the assessment order may
be rectified within four years from the end of the financial year in
which the order was passed. The Commissioner can revise the order
passed by an assessing officer within two years from the end of the
financial year in which the order was passed.
Refunds arising form assessments and appellate
orders are granted without any application. In other cases, a refund
application must be made within two years from the end of the
accounting year.
In the case of an over assessment, an appeal to
the Commissioner of Income Tax (Appeals) may be filed within 30
days. Either the assessing officer or the taxpayer may appeal from
the Commissioner's order to the Income Tax Appellate Tribunal within
60 days. From the Tribunal's order, either party may appeal (only on
points of law) to the High Court and from there to the Supreme
Court.
Alternatively, a taxpayer may file a revision
petition to the Commissioner of Income Tax within one year from the
receipt of the assessing officer's order.
Each appellate authority passes a written order
after considering the arguments and evidence put forward. Generally,
accountants can appear t all levels below the High Court. Only
lawyers can appear before the High Court or the Supreme Court. If an
adjustment results in double taxation contrary to treaty provisions,
the taxpayer is entitled to present its claim to the competent
authority in the taxpayer's country of residence.
Taxes are collected through estimated advance
tax payments, withholding at source and self-assessment, i.e.,
balance payment with the return as filed. Additional amounts become
due if the assessed income is higher than the returned income.
Corporate taxpayers are required to estimate
their tax liability (less taxes withheld) and make advance
payments in four installments- at least 15 percent before June 15,
at least 45 percent (including the 15 percent) before September
15, at least 75 percent (including the 45 percent) before December
15, and the balance before March 15 within the accounting year. If
the advance tax paid is less than 90 percent of the ultimate tax
liability, interest is payable at the rate of 2 percent per month.
Deferral of installments of advance tax subjects the taxpayer to
interest at the rate of 1.5 percent pr month. If the advance tax
paid plus the tax withheld falls short of the tax on the returned
income, the difference (called self-assessment tax) must be
deposited (along with all interest due) before the return is
filed. Additional taxes, interest, etc., demanded by the Tax
authorities must paid within 30 days, failing which interest is
incurred at 1.5 percent per month.
Taxes are required to be withheld at source
from interest, dividends, payments exceeding Rs.120,000 in a
particular financial year by way of rent, and all payments to
nonresidents (at the rates indicated in Appendix IV). Tax is also
required to be ducted from payments to contractors and
sub-contractors, fees for professional or technical services,
winnings from lotteries and horse races, and insurance
commissions.
Employers are responsible for with holding
tax from wages, salaries and other remuneration paid to
employees, taking into account values of perquisites and certain
deductions and rebates to which the employees are entitled. Tax
for the purpose of withholding is calculated at the same rates as
shown in Appendix VI.
Taxes withheld must be deposited and
information returns must be filed by the payer within the
specified time limits. The payee is granted full credit for the
tax withheld against the final tax liability upon production of
tax deduction certificates obtained from the payor.
AS notes above, an assessing officer who
considers it necessary to scrutinize the return issues a notice
within a specified time requiring the taxpayer to appear and
produce books and evidence in support of the returned income and
the claims made. Accountants or lawyers often appear on behalf
of the taxpayers before the assessing officer. The books and
evidence are reviewed in various degrees of detail by the
assessing officer in the assessor's office before the assessment
order is passed. In practice, most medium-size and large
companies are selected for such scrutiny assessment every year.
Normally, audits are not conducted by the Tax authorities in the
taxpayer's premises.
The Income Tax Act provides for civil
penalties for nonpayment of self-assessment tax, deliberate
filing of false returns, false statements, defaults in payments
of taxes demanded, etc. In addition, the Act provides for
prosecution in specified cases.
The Income Tax Act sets various
limitations periods for filing of returns, completion of
assessments, reopening of assessments, etc. These periods are
discussed generally under "Tax returns" and
Assessments" above.
Individuals are required to file their
returns for the year ended March31 by the following June 30,
unless there is income from a business or profession (in
which case the due date is August 31) or the accounts must be
audited (in which case the due date is October 31). Other
administrative pro9cedures (except the system for payment of
advance tax discussed below) are generally the same as those
for corporations discussed above. Residents and nonresidents
are treated alike.
Individuals are required to estimate
their tax liability (less taxes withheld) and pay such taxes
in advance in three installments-at least 30 percent before
September 15, at least 60 percent (including the 30 percent)
before December 15 and the balance before March 15.
The tax laws do not recognize
community property of husband and wife (except to a limited
extent in Goa and the very small territories of Daman and
Diu - like Goa previously under Portuguese administration-
and Dadra and Nagar Haveli). However, there is in India a
special indigenous Concept called the Hindu undivided
family (HUF) where, under Hindu laws, certain property can
be held in common by the family, in which case the HUF is
treated as a separate entity and taxed accordingly.
Every individual who has a taxable
income must file a separate return. Joint returns are not
permitted. However, as an antiavoidance measure, income
from property transferred by an individual to a spouse
without adequate consideration or the spouse's
remuneration from a concern in which the individual has at
least a 20 percent interest may, in certain circumstances,
be included in the individual's income.
As an antiavoidance measure, a
minor's income (except from manual work or exercise of
skill or talent) is included in the income of the parent
having higher income.
The returns filing requirements,
assessments and procedures for foreign personnel are the
same as those described above for individuals. An
additional requirement is that a person not domiciled in
India must obtain a tax clearance certificate from the
Tax authorities before leaving the country if present in
India continuously for more than 120 days.
A trust or partnership is
required to file its return for the year ended March
31 by the following June 30 unless it has income from
business, in which case the due date is August 31, or
it is required to be audited, in which case the due
date is October 31.
If a partnership is required to
be audited, the due date for filing a partner's return
is October 31. The partners pay tax on salaries and
interest received from the firm, and the firm pays tax
on the balance profits.
A trust is treated as an entity
if the shares of the beneficiaries are indeterminative
and as a conduit otherwise. Certain charitable trust
fulfilling specified conditions are exempt from tax.
Other procedural matters relating
to assessments, appeals, etc., are the same as in the
case of corporations. Procedures for payment of
advance tax are, however, the same as in the case of
an individual taxpayer.
General Section
