The finance ministry is expected to make it mandatory for all firms who are subject to tax audit to compulsorily file electronic returns.
According to official sources, a decision in this regard has been taken, but a formal announcement is likely to be made after some time. This proposal will bring in an estimated 7 lakh companies under the ambit of e-filing of tax returns.
We are going to make it mandatory, a senior ministry official said.
At present, not every company is covered under special audit. Only those companies above the threshold limit are subject to the audit. For those who are covered, once the audit is complete, they need to file a return, using Form 3CB, with the Income Tax department.
That return is very bulky and takes a lot of time to prepare and submit. This is a procedural reform and a good move. It will improve the procedure by eliminating counters and improve efficiencies in the department said Ashok Dhingra, partner and head of indirect tax, Khaitan & Co.
Finance Minister P. Chidambaram had said in the Budget speech said that e-filing of corporate returns, introduced this financial year, has been a resounding success.
Until January 31, 2007, corporates filed 301,736 returns electronically", he said. He had added that electronic filling of returns would be made mandatory for more categories of assessees.
Chidambaram had launched the e-filing of income-tax returns in October, 2006. Trusts are exempted from this process.
Corporate taxpayers also able to file their income tax and fringe benefit tax (FBT) returns through Form No 1. If the e-return is without a digital signature, the taxpayer will have to file a paper return as well. The filing is done through a website called incometaxindiaefiling.gov.in
The Ministry of Company Affairs had also made e-filing of annual return, balance sheet and profit and loss account of companies mandatory. The filing is done on the portal www.mca.gov.in.
The company or individual has to furnish director identification number (DIN) in the e-forms. DIN is mandatory for all existing directors and those intending to be directors.
The forms are also to be signed digitally using a digital signature certificate (DSC). The DSC issued by the certifying authorities will be valid for one or two years under section 24 of the I-T-Act 2000.
An alternate approach is also being implemented through the MCA21- a major e-governance initiative to introduce efficiency and transparency in service delivery.