With this Rule 132, taxpayers, who claimed a deduction of cess or surcharge, can share details of their taxable income, tax paid, and amount of cess or surcharged to be paid.
Rule 132 is introduced
in the backdrop of disputes about whether cess or surcharge can be applied to
income as a deduction or not.
The Central Board of
Direct Taxes, on October 1, 2022, set in motion Rule 132 of Income Tax. But
there is uncertainty among the masses towards Rule 132. In this article, we
will decode Rule 132 of the Income Tax. Rule 132 is introduced in the backdrop
of disputes about whether cess or surcharge can be applied to income as a
deduction or not. Earlier, when business groups calculated their net taxable
profit, the law clarified that income tax paid by them couldn’t be allowed as a
deduction.
This ruling did not
clarify whether a cess or surcharge on such income tax is allowed as a
deduction or not. Across India, business groups and tax authorities claimed
deductions on such cess or surcharge in their tax calculations, hence the issue
remained disputed. But now, a court, in its recent judgment, shed light and
allowed the deduction for cess and surcharge from the income.
Here is the catch, though. Finance Act 2022 states a
deduction for such cess and surcharge on income tax is not an allowable
deduction from the taxable profit. Despite this, the government provided a
one-time window for the taxpayers to recompute their taxable profits after
removing such cess or surcharge and deposit the tax on such income. Hence Rule
132 deals with the procedure for computing income.
With this Rule 132,
taxpayers, who claimed a deduction of cess or surcharge, can share details of
their taxable income, tax paid, and amount of cess or surcharged to be paid.
The information has to be submitted electronically through Form 69.
Hence, Form 69 will
allow the authorities to recompute the taxable income of the taxpayer and
additional tax to be paid by him. Through Form 70, taxpayers can make payments
of tax and inform the tax officer of the payment. No penalty will be levied by
the authorities on such payments.
Rule 132 allows
assessees to comply with the provision of Section 155 which allowed assessing
officers to re-compute the total income.
Rule 132 vs Revised Returns
Rule 132
differs greatly from a revised return. A Revised return can only be filed up to
31st December 2022 for ITR filed for FY 2021-22 (AY 2022-23). However, an
assessee can file for re-computation of income all the way from FY 2004-05 (AY
2005–06) in Form 69 up to 31st March 2023
This recomputation will
be under Section 270A❲3❳and can address the
under-reported income. Such income will be subject to taxes and penalties.
Individuals earning from business or profession and have claimed deduction of
surcharge or cess in the previous years will be impacted by Rule 132. Moreover,
the last date to furbish form 69 and such income is March 31, 2023.
Bare Text of Rule 132
1[Application for recomputation of income under
sub-section (18) of section 155.
132. (1) An application requesting for recomputation of total income
of the previous year without allowing the claim for deduction of surcharge or
cess, which has been claimed and allowed as deduction under section 40 in the
said previous year, shall be made in Form No. 69 on or before the 31st day of
March, 2023.
(2)
Form No. 69 shall be furnished electronically to the Principal Director General
of Income-tax (Systems) or the Director General of Income-tax (Systems) or the
person authorized by the Principal Director General of Income-tax (Systems) or
the Director General of Income-tax (Systems).
(3)
Principal Director General of Income-tax (Systems) or the Director General of
Income-tax (Systems) shall lay down the procedures and standards for furnishing
and verification of Form No. 69 and to forward the application received in Form
No. 69 to the Assessing Officer.
(4)
The Assessing Officer shall, on receipt of the application in Form No. 69,
recompute the total income by amending the relevant order and issue notice
under section 156 specifying the time period within which amount of tax
payable, if any, is to be paid,-
(i)
for the assessment year relevant to the previous year referred to in sub-rule
(1); and
(ii)
for the assessment years subsequent to the assessment year referred to in
clause (i), if the order for such assessment year results in variation in carry
forward of loss or allowance for unabsorbed depreciation or credit for tax
under section 115JAA or section 115JD.
(5)
The assessee shall, after making the payment of the tax determined under
sub-rule (4), furnish the details of payment of tax in Form No.70 to the
Assessing Officer within thirty days from date of making the payment.]
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NOTES:-
1.
Inserted vide NOTIFICATION NO. 111/2022 dated 28-09-2022 w.e.f. 01-10-2022
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