Mumbai, August 4, 2017

Taxpayers who wish to file an appeal against income tax demands raised against them will have to shell out more to obtain a stay, pending disposal of their appeal with the Commissioner of I-T (Appeals).

Corporate tax payers and HNIs, who face heavier I-T demands, will have to cough out more for obtaining a stay . Approaching CIT (Appeals) is the first stage for obtaining redress, after which the appeal process -if further li igated -moves to the I-T appellate tribunals and courts.

In its recent office memorandum, the Central Board of Direct Taxes (CBDT) has prescribed a deposit of 20% of he disputed I-T demand by axpayers for obtaining a stay pending disposal of the mat er by the CIT (Appeals). Earlier, the aggrieved taxpayer had o deposit only 15% of the disputed I-T demand before approaching the CIT (Appeals).

CBDT's internal memorandum, dated July 31, points out that high-pitched assessments have been contained over the years through several measures. “This has resulted n fairer and more reasonable assessment orders, thus the standard rate of deposit of 15% of the disputed amount is found to be on the lower side.Based on feedback received from the I-T officials (field authorities), this rate stands revised to 20% of the disputed amount, where the demand is contested by the taxpayer before the CIT (Appeals),“ states the memorandum.

As earlier, the I-T authorities can ask for a deposit higher than the standard rate.This applies where addition to the taxpayers' income during assessment is owing to issues confirmed by appellate authorities in earlier years, or where the decision of the jurisdictional high court or Supreme Court is in favour of the I-T authorities. A higher deposit can also be ordered where the I-T demand has been raised based on credible evidence obtained in search and survey operations. “Given that the government is aiming at a nonadversarial regime, this hike in deposit seems unwarranted,“ says Abhishek Goenka, leader corporate and international tax at PwC -India.

Concurs, Girish Vanvari, national head of tax at KPMG India, “Increase in the standard rate of deposit from 15% to 20% will adversely impact the cash flow situation of taxpayers, especially where it stems from demands which may not be tenable at higher appellate levels.“

[The Economic Times]