Is IT Department’s Collection Targets Culminating in Tax Terrorism?
Tax terrorism has been a buzz word in corporate circles since it came into public attention, when quoted as said by Narendra Modi in a FCCI interactive session.
As per official sources, the government is said to have achieved (or exceeded) the direct tax collection target of Rs 6.36 lakh crore for the last financial year.
The attempts to reach this target was kept no secret when the CBDT issued orders to keep IT offices open from March 29, 2014 (Saturday) to March 31, 2014 (Monday).
But questions arose from various corners whether this has been done at the expense of the corporate, the biggest source of IT contribution. Hence, the latest action by the tax department to collect premium against the sale of shares has caused wide outrage.
In notices, served on March 30, 2014 by the income tax office, corporate across the nation was told to justify the premium, and for those who failed, the amount was treated as income and therefore taxed. The notice was issued after collecting data from the registrar of companies. The tax authorities are said to be quoted saying that the department was following a new rule that came into force from 2012-13.
According to Economic Times, “The intention of this law is to curb money laundering and bogus transactions where the premium an investor pays per share cannot be explained. “ Close to 200 companies subjected to case, where the value of share premium is more than 1 crore have received notices from the tax office in connection with share premium charged by them.
What complicates the situation is that 6 year old assessments are being re-opened, while tax experts argue that the IT department is not authorized to re-open cases that happened prior to AY 2012-2013.
Considering the importance of the issue, it is advisable that firms continue to keep track of the proceedings of IT office regarding premium collection against the sale of shares.
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