Businesses and practitioners will now update their tax audit records, thanks to updated regulations announced by the Central Board of Direct Taxes (CBDT) on Friday that remove technical barriers to seeking deductions for such expenses.
An updated audit report signed by the accountant may be issued in cases where the taxpayer makes such payments such as taxes, duties, cess, or provident fund donation to employees after the tax audit report has been submitted in an assessment year, CBDT said in a notification.

Certain expenses, such as interest, royalties, or fees for technical services, are not allowed to be deductible from an assessee’s taxable income if the tax is not deducted at source and paid to the government, according to the Income Tax Act. Also, expenditures like provident fund contributions and leave encashment are only permitted in the year in which they are made.

If all of the payments are received after the tax audit report is filed, it will be required to recalculate the amount of spending that is available for a deduction from taxable income. The new law makes obtaining this exclusion possible for taxpayers who are expected to file tax audit reports. This removes the need for the taxpayer to justify whether an audit report and a deduction argument don’t fit. The new regulation is more of an administrative process improvement than a practical law improvement, but it is consistent with the government’s attempts to make doing business simpler.

CBDT’s revised regulations would simplify the process of seeking deductions.

                                   

Businesses and practitioners will now update their tax audit records, thanks to updated regulations announced by the Central Board of Direct Taxes (CBDT) on Friday that remove technical barriers to seeking deductions for such expenses.
An updated audit report signed by the accountant may be issued in cases where the taxpayer makes such payments such as taxes, duties, cess, or provident fund donation to employees after the tax audit report has been submitted in an assessment year, CBDT said in a notification.

Certain expenses, such as interest, royalties, or fees for technical services, are not allowed to be deductible from an assessee’s taxable income if the tax is not deducted at source and paid to the government, according to the Income Tax Act. Also, expenditures like provident fund contributions and leave encashment are only permitted in the year in which they are made.

If all of the payments are received after the tax audit report is filed, it will be required to recalculate the amount of spending that is available for a deduction from taxable income. The new law makes obtaining this exclusion possible for taxpayers who are expected to file tax audit reports. This removes the need for the taxpayer to justify whether an audit report and a deduction argument don’t fit. The new regulation is more of an administrative process improvement than a practical law improvement, but it is consistent with the government’s attempts to make doing business simpler.

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