Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: form 3cd :: empanelment :: Central Excise rule to resale the machines to a new company :: VAT Audit :: ACCOUNTING STANDARD :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: cpt :: articles on VAT and GST in India
« News Headlines »
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016

Inflated income: Can Satyam claim a refund of taxes?
January, 19th 2009

Today, the fraud at Satyam Computer Services [Get Quote] is one of the hottest topics around. There are so many questions relating to various taxation issues that are constantly cropping up.

One of the common questions going through everyone's mind is: Can Satyam claim a refund of taxes already paid on its inflated income for all the earlier years?

In fact, such a situation could even arise in case an individual has inflated his income and paid taxes. Now that he has been caught or admitted to the fraud - can he claim refund of the already-paid taxes?

The basic question would be why should an individual inflate his income? The main reason many people do this is because they want to get a higher loan from a bank. Or, sometimes it is also used to convert black money.

The first issue is: Who is eligible for refund of income tax already paid? Simply put, any tax payer who has paid income tax, which is higher than the tax legally payable by him, can claim a refund of excess income tax paid. Income Tax can be paid by way of deduction at source, advance tax or as self-assessment tax.

The next issue is: How to claim refund of such excess taxes paid? A tax payer can claim refund of taxes by filing a revised return, in which he has to reflect the correct income (which is actually taxable), the income tax already paid and the refund due on the basis of his revised return.

A person can file a revised return at any time before the expiry of 1 year from the end of the relevant assessment year or before the completion of the income tax assessment, whichever is earlier.

Theoretically, a return can be revised any number of times before the expiry of 1 year from the end of the assessment year or before assessment by the Income Tax department is completed; whichever event occurs earlier. So, the law technically provides for a person, who wants to claim refund of taxes or who wants to make any other changes in the original return, by giving him a provision of filing a revised return.

An assessee can also claim refund of income tax by making a rectification application under section 154 of the Act, to amend the assessment order passed by the assessing officer.

But it can only be done if there is a mistake, which is apparent from the record. Such a rectification application can be filed by the assessee before the expiry of four years from the end of the financial year, in which the assessment order  was sought to be amendedwas passed earlier.

Every claim for refund of taxes shall be made in the prescribed form no 30. While making a claim for refund, an assessee cannot question the correctness of any assessment or other matters decided that have become final and conclusive or ask for a review of the same through these provisions. The taxpayer will also be eligible for interest on refund at an annual interest rate of 6 per cent.

But Sections 138(5) and 154 of the act apply only to a bonafide mistake made by the assessee and therefore, a person who has out of a malicious intent, disclosed higher profits, to give a false picture of his organisation to the world at large cannot take the benefit of these sections for claiming refund of taxes already paid.

The operative expression in this whole exercise is 'bonafide mistake'. In case, the income or profits have been inflated just to make things look rosy for acquiring a loan or some other purpose, the assessee will not get the benefit of these sections.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions