The Central Board of Direct Taxes (CBDT) may introduce a new rule asking entities with yearly income of Rs 1 crore and professionals with income of Rs 50 lakh per year to voluntarily report current income, tax payments and advance tax liability.

The Central Board of Direct Taxes (CBDT) plans to introduce a new rule according to which companies with an annual income of Rs 1 crore and professionals with annual income of Rs 50 lakh will have to report estimates of current income, tax payments and advance tax liability voluntarily,reports Mint.

The income estimates till September 30 will have to be submitted by November 15. If the income estimate provided by the company is less than the income for the corresponding period last year by Rs 5 lakh or 10%, whichever is higher, the taxpayer will have to give a new estimate as on December 31 of the year. The new estimate will have to be filed before the end of the following month.

An accurate estimation of income and advance tax will help companies/profesionals avoid additional payment for default.

With this new rule, income tax officers will not have to track companies' chief financial officers for tax enquiries.

The new rule, if passed, will help the tax department in identifying sectors and regions where tax receipts are lagging and boost the tax department’s revenue mobilisation steps.

However, experts told Mint that the proposed draft rule will increase the compliance burden for the industry.

“The details to be provided in Form 28AA regarding details of taxable income for the period up to September 30 or December 31 of the year immediately preceding the ‘previous year’ may not be readily available with the companies and they may be required to undertake further exercise to compute the same as the said details has to be accurate but not merely an estimate,” said Amit Singhania, partner, Shardul Amarchand Mangaldas & Co., a law firm.

‘Previous year’ here refers to the taxable income earned in the financial year.