Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
Top Headlines »
Open DEMAT Account in 24 hrs
 How to file ITR as an OCI on Indian income?
 4 income tax benefits you could expect from Budget 2023
 10 key steps to plan your taxes in 2023 Income Tax
 Clarification for the purposes of clause (c) of Section 269ST of the Income-tax Act, 1961 in respect of dealership/distributorship contract in case of Co-operative Societies
 How to save income tax under various sections in FY 22-23?
 5 tax-saving techniques for FY23 Here is what experts suggest
  Tax moves to make before end of 2022 Your Money
 Income Tax Dept Exempts Non-Resident Taxpayers From Filing Form10F For Now
 Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions
 Master Direction Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022

All businessmen should file returns
December, 09th 2006
The least the Government can do is to call upon businessmen to file returns so that they are not the arbiters of their own tax destiny.

The salaried class, especially the talented segment of it, is closing in on the professionals in the matter of income. It is time professionals and businessmen caught up with the salaried class in the matter of tax compliance.

Every company is required to file its income-tax return no matter whether it had profit or loss. Even a peon is required to file a return if his gross total income (GTI) during the previous year was more than Rs 1 lakh. But not a professional with receipts even in the region of, say, Rs 5 lakh if he has enough expenses to push his GTI below the tax-free threshold. He is the monarch of all he surveys in that unless the law catches up with him in some adversarial proceedings, his word is final as far as authenticity of income computation is concerned.

Considerable leeway

It has not occurred to the Government that businessmen and professionals, enjoying as they do considerable latitude in the matter of arranging their expenses, should at least be called upon to file their returns mandatorily (no matter what their income is) on a par with the corporate sector so that the tax department has at least some hold on them.

Way back in 1997, the Working Committee on Direct Taxes suggested that professionals should be deemed to have earned a profit of 70 per cent of their fees with 30 per cent being presumed to be legitimate expenses, nothing more nothing less.

If this sounds a trifle harsh, the least the Government can do is to call them upon to file returns so that they are not the arbiters of their own tax destiny. After all, if a salaried person has to file his return even if his tax-oriented savings under Section 80C would ultimately bail him out of the clutches of taxation if his GTI is more than Rs 1 lakh, a fortiori businessmen and professionals should also be compelled to file their returns no matter what their income is if only to give the tax department the upper hand in scrutinising their accounts.

It is a trifle curious that employers are called upon to pay fringe benefit tax (FBT) on a whole lot of expenses on the ground that certain specified percentage of these inure for personal benefit of employees, especially those in the higher echelon. If this is true, it is equally true that self-employed businessmen and professionals too book greater part of their personal expenses blithely as for business. Shouldn't there be an FBT on them also?

Two things to do

The Finance Minister should do two things without delay. First, make filing of return mandatory for everyone in business and not for companies alone, as is the case now. While on the point of mandatory return, let senior citizen businessmen and professionals enjoy exemption on income up to Rs 1.85 lakh by all means, but only by filing a return. The short point is businessmen and professionals irrespective of their age and sex should be called upon to file returns.

Second, extend the FBT scheme to self-employed persons too whether they are constituted as individuals or firms without allowing them the alibi that FBT is not applicable because they don't employ anyone the personal expenses targeted by FBT is more conspicuously present in the income statement of businessmen and professionals.

S. Murlidharan
(The author is a Delhi-based chartered accountant.)

Home | About Us | Terms and Conditions | Contact Us
Copyright 2023 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting