CBDT relaxes scrutiny norms

CBDT relaxes norms for scrutiny of company tax returns

New Delhi, July 27: In what could be a major relief to the corporate sector, the revenue department has decided not to scrutinise the tax returns of over 1000 top companies, provided no major disputes are pending against them they had been complying with laws. "The annual returns of tax complying companies would be not be scrutinised this year. The decision has been taken by the Central Board of Direct Taxes (CBDT) to encourage better tax compliance among the corporate," a senior finance ministry official said. Last year, the CBDT took a decision to scrutinise tax returns of about 200 'A' group companies listed on the Bombay Stock Exchange BSE, 500 National Stock Exchange companies and all non-banking finance companies. The tax returns of all the banks and public sector units were also checked by the income tax officials. The decision to relax scrutiny norms follows Finance Minister P Chidambaram's announcement after the annual meeting of Chief Commissioners of Income Tax Department that government would ensure that tax complying taxpayers are not harassed by the Income Tax Department. Under the scrutiny, the assessing official would issue notices to the taxpayer within a year of filing the return and probe any tax evasion by verifying claims about tax exemptions, amount in bank accounts, cash reserves, details of loans, gifts and credit cards. If the department has not raised tax demand of Rs 10 lakh or more in addition to deposited tax and if the department has not won any tax suit against the firm, the officials would not open returns for scrutiny. However, the department may consider to open the tax returns of companies, if they infused fresh capital of Rs 50 lakh or more during last fiscal or filed for tax exemptions for the first time under any scheme. According to the income tax department, in 2007-08 the scrutiny of about 3.2 lakh tax returns, including about 51,000 filed by the corporate, resulted in additional tax demand of Rs 73,200 crore, out of which Rs 28,700 crore has already been realised. However, considering the improvement in tax compliance and electronic filing and payment of returns by the corporate, the department has relaxed norms of scrutiny, the Finance Ministry official add

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July 29, 2008