Returns of foreign cos claiming big refunds to come under I-T scanner
The I-T department wants to target foreign companies NRIs claiming hefty refunds. For the first time, it has decided to bring tax returns filed by foreign companies under compulsory scrutiny.
By Hema Ramakrishnan, TNN |
NEW DELHI: The income tax department has decided to target foreign companies and non-resident Indians (NRIs) claiming hefty refunds. For the first time, it has decided to bring tax returns filed by foreign companies under compulsory scrutiny.
However, the quantum of refunds for selecting a case will be decided by the Director General Income Tax (International Taxation).
The tax rate for foreign companies is 40% against 30% for domestic companies. I-T returns of domestic companies claiming over Rs 50 lakh as refunds in Delhi, Mumbai, Kolkata, Chennai, Pune, Hyderabad, Bangalore and Ahmedabad will also be scrutinised.
This was done in the last fiscal. These cases will be picked up through a computer-assisted scrutiny system (CASS) to make them discretion-free. The directives say that the DGIT (International Taxation) or DGIT (Exemptions) can direct the assessing officer to take up other cases for scrutiny as well. But the reasons have to be recorded in writing.
Charitable trusts and institutions enjoying huge tax breaks have also been brought under the compulsory scrutiny basket for the first time.
The guidelines, cleared by the Union finance minister P Chidambaram, say that the I-T returns of universities, educational institutions, nursing homes whose annual receipts are over Rs 10 crore in Pune, Hyderabad, Bangalore and Ahmedabad will be scrutinised.
However, the quantum of refunds for selecting a case will be decided by the Director General Income Tax (International Taxation).
The tax rate for foreign companies is 40% against 30% for domestic companies. I-T returns of domestic companies claiming over Rs 50 lakh as refunds in Delhi, Mumbai, Kolkata, Chennai, Pune, Hyderabad, Bangalore and Ahmedabad will also be scrutinised.
This was done in the last fiscal. These cases will be picked up through a computer-assisted scrutiny system (CASS) to make them discretion-free. The directives say that the DGIT (International Taxation) or DGIT (Exemptions) can direct the assessing officer to take up other cases for scrutiny as well. But the reasons have to be recorded in writing.
Charitable trusts and institutions enjoying huge tax breaks have also been brought under the compulsory scrutiny basket for the first time.
The guidelines, cleared by the Union finance minister P Chidambaram, say that the I-T returns of universities, educational institutions, nursing homes whose annual receipts are over Rs 10 crore in Pune, Hyderabad, Bangalore and Ahmedabad will be scrutinised.
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Institutions that have substantial government funding have, however, been spared. Returns of all the NSE-500 companies and the BSE A group companies listed on the Bombay Stock Exchange (BSE) on March 31, ’05, will be also be scrutinised.
Last fiscal, all these companies listed on the BSE as on August 31, ’04, were brought under compulsory scrutiny. Like last year, all companies that have a liable to pay minimum alternate tax and whose profits exceed Rs 50 lakh figure in the compulsory scrutiny list.
Similarly, tax returns of stock brokers (including sub-brokers) — who disclose brokerage receipts of over Rs 1 crore, but declare income that is less than 10% of this amount — will be scrutinised. Amalgamated companies that claim a set-off under Section 72 A of the Income Tax Act are also under the scanner. The tourism sector, among others, gets this benefit. Non-banking finance companies and investment companies with a paid-up capital of over Rs 10 crore continue to be in the compulsory scrutiny basket.
International transactions —relating to transfer pricing —where the total value exceeds Rs 5 crore are also under the scanner. Separate scrutiny guidelines have been given for corporate and non-corporate assesses.
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