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New Delhi: The Central Board of Direct Taxes (CBDT) on Friday introducing new rules to iron out procedural hurdles in claiming deductions for certain spending. With these new rules, businesses and professionals can now revise their tax audit reports.
CBDT said in a notification that in cases where the taxpayer makes certain payments such as taxes, duties, or cess or provident fund contribution of employees after the tax audit report has been submitted in an assessment year, a revised audit report signed by the accountant can be given to claim relief for that spending or payment.
The Income Tax Act disallows certain spending such as interest, royalty, or fee for technical services as a deduction while computing the taxable income of an assessee if the tax is not deducted at source and paid to the government. Also, spending such as provident fund contribution and leave encashment are allowed as an expenditure only in the year that it is spent.
If any of the payments are made after the tax audit report has been filed, a recalculation of the extent of the spending eligible as a deduction from taxable income may become necessary. The new rule makes it easier for taxpayers who are required to file tax audit reports to claim this deduction. This eliminates the need for the taxpayer to explain the mismatch between an audit report and the claim for deduction, said CBDT.
The notification allows revision of the tax audit report till the end of the relevant assessment year. It removes an administrative difficulty and streamlines the procedure for claiming certain deductions while computing taxable income," said
Businesses with sales of Rs 1 crore or more and professionals with income more than Rs 50 lakh have to file tax audit reports. However, firms having up to Rs 5 crore sales need not file tax audit reports if they do not deal more than 5% of their receipts and spending in cash.
Meanwhile, the Central Board of Direct Taxes (CBDT) has notified Income Tax Return Forms (ITR Forms) for the Assessment Year 2021-22. Keeping in view the ongoing crisis due to COVID pandemic and to facilitate the taxpayers, no significant changes have been made to the ITR Forms in comparison to the last year’s ITR Forms. Only the bare minimum changes necessitated due to amendments in the Income-tax Act, 1961 have been made.
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