Draft New IT Rule 39A/ Form 28AA: Intimation of Estimated Income, Advance Tax Liability, etc.

CBDT has issued draft New IT Rule 39A/ Form 28AA meant for Intimation/ Self-reporting of Estimated Income, Advance Tax Liability and Payment thereof by Companies and Tax Audit Cases and has invited comments/ concerns on related issues from stakeholders at dirtpl4@nic.in latest by 29 Sept. 2017.

Draft CBDT Notification dt. 19 Sept. 2017 on New IT Rule 39A/ Form 28AA for Comments

Draft IT Rule 39A

(1) An assessee being a company and a person (other than a company), to whom the provisions of section 44AB are applicable shall furnish an intimation of estimated income and payment of taxes as on 30th September of the previous year, on or before 15th November of the previous year.

(2) If the income estimated as on 30th September of the previous year is less than the income of the corresponding period of the immediately preceding previous year by an amount of Rs.5 Lakh or 10 percent, whichever is higher, then the assessee shall be required to furnish an intimation of estimated income and payment of taxes as on 31st December of the previous year, on or before 31st January of the previous year.

Draft IT Form 28AA

[under proposed IT Rule 39A]

Intimation of estimated income, tax liability and payment of taxes for the previous year

(….Please refer above attachment for format of proposed IT Form 28AA)

CBDT Press Release dt. 19 Sept. 2017 on Draft New IT Rule 39A/ Form 28AA

A taxpayer who is liable to discharge part of its tax liability by way of advance tax has to bear additional burden of interest for default of advance tax, in case total advance tax paid for the year falls short of the assessed tax by ten percent or more. This interest is levied as per the provisions of section 234B of the Income-tax Act, 1961 (“the Act”). Such taxpayers are further liable to pay interest for deferment of advance tax, in case any quarterly instalment of advance tax paid falls short of the prescribed percentage of total advance tax paid. This interest is levied in accordance with the provisions of section 234C of the Act.

It is of utmost importance for such taxpayers to arrive at a reasonably accurate estimate of their current income and advance tax liability, so that the additional burden on account of interest for default/deferment of advance tax can be

Needless to say, a continuous flow of tax revenues throughout the year is critical for the Government so as to meet various budgetary allocations such as welfare schemes, infrastructure development, defence expenditure etc. A reliable and advance estimate of tax revenues for the year would also provide much needed perspective for planning and prioritizing the Government expenditure.

In order to address these concerns, it is proposed to create a mechanism for self-reporting of estimates of current income, tax payments and advance tax liability by certain taxpayers (companies and tax audit cases) on voluntary compliance basis. The proposed reporting mechanism is sought to be created by way of inserting a new Rule 39A and Form No. 28AA in the Income-tax Rules, 1962. The proposed draft notification has been placed in public domain on the website of Income Tax Department for inviting comments from stakeholders and general public. The comments and suggestions on the draft Rule and Form may be sent electronically at the email address dirtpl4@nic.in by 29th September, 2017.

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