What is New Income tax Rule 132?

New Rule Has Been Introduced

- The legislation has made it clear that income tax paid by a business cannot be deducted when determining its net taxable profit. - The law, however, did not state whether or not a cess or surcharge on such income tax is eligible for a deduction.  - In their tax calculations, several businesses had been deducting such cess or surcharge. 

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- Any taxpayer who has taken advantage of the cess or surcharge deduction can inform the tax authorities of their taxable income, tax payments, and the amount of cess or surcharge they were allowed to deduct.  - Form 69 must be used to electronically submit the information on the income tax portal.  - The tax officer will recalculate the taxpayer's taxable income upon receiving Form 69 and notify the taxpayer of any additional tax that will be due.  - The taxpayer can then submit Form 70 to the tax officer with the tax payment information. 

Rule 132 Outlines the Process

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Advantages of Rule 132

- A helpful feature in Rule 132 permits assessees to adhere to Section 155's requirement that Assessing Officers recalculate the total income for any prior years in which the assessee would have claimed a deduction for a surcharge or cess that would have been ineligible under Section 40(a) (ii).

- This recomputation usually triggers section 270A(3) provisions, which treat the prohibited surcharge as unreported income liable to taxes and, more significantly, penalties.

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What occurs if you fail to provide information

- The deadline to submit this data in Form 69 is March 31, 2023. - The taxpayer may be found in default if the information is not provided by the deadline.  - He would be responsible for interest and penalties in addition to the tax amount in such a situation.

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