The Central Board of Direct Taxes (CBDT) plans to give businesses time to prepare for the tax audit reports that requires two key disclosures. Hence, the board postponed the due date of filing the report till March 31, 2020.
The IT department, now, wants companies to disclose key details on GST and GAAR (General Anti-Avoidance Rules) in their tax audit reports. The CBDT’s circular said that the decision to defer was taken when it received the industry representations.
The two disclosure requirements were introduced in August 2018 and deferred till the end of March 2019. Clause 30C mandates companies to provide details of transactions designed to avoid taxes. Business entities with over Rs 1 crore sales and professionals having income of more than Rs 50 lakh must file the audit reports.
Amit Maheshwari, Partner at Ashok Maheshwary & Associates Llp. explained, “Only the disclosure requirement in the tax audit report is deferred by a year, not the application of GAAR provisions per se. GAAR empowers tax authorities to check whether a business arrangement has commercial substance or is merely a ploy for obtaining tax benefits.”
If the business transactions are impermissible, legal only in form, and aimed at saving tax, then such transactions will be denied.
The tax audit report requirements for companies to specify a break-up of payments to their vendors as per their GST registration has also been postponed. Small businesses might find it onerous to make such classification.
An Editor by day and a sloth by night…I would love to eat and sleep throughout the day if given a chance…I enjoy reading and love my job and my team at ClearTax.