Income Tax Act may be tailored to simplify corporate levies

18 Feb 2013

1

Finance minister P Chidambaram, keen to stabilise India's corporate tax regime, is likely to introduce the concept of tax accounting standards (TAS) in the Income Tax Act through the Finance Bill 2013, which he will present to Parliament in the upcoming budget session.

The TAS would be structured so that calculation of income tax other than the minimum alternate tax is independent of a company's book profits, according to a report in The Financial Express, citing finance ministry sources.

The paper said modifications would be made to Section 145 of the Income Tax Act to allow calculation of an entity's taxable income based on TAS without having to maintain two sets of accounts for stakeholders and the tax authorities.

TAS would have a major impact on tax outgo of companies, especially those in the construction and engineering sectors and banks, in terms of curtailment of freedom in accounting flexibilities, according to the report.

The introduction of TAS will necessitate some changes in the tax return forms. The Central Board of Direct Taxes (CBDT) has been working on TAS in order to reduce the accounting alternatives allowed to taxpayers by the accounting rule maker ICAI in some of the 28 standards.

The proposed TAS will be applicable for all income tax payers, not just corporate assessees. From the year TAS is implemented, taxpayers have to compulsorily follow it while calculating their income tax liability, which could be quite different from what is reported in the profit and loss account prepared under the Companies Act.

However, sources said TAS may not immediately be made applicable to decide on the liability of having to pay MAT, which is based on book profits calculated as per the Companies Act that mandates use of ICAI's standards.

Business History Videos

History of hovercraft Part 3...

Today I shall talk a bit more about the military plans for ...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of hovercraft Part 2...

In this episode of our history of hovercraft, we shall exam...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Hovercraft Part 1...

If you’ve been a James Bond movie fan, you may recall seein...

By Kiron Kasbekar | Presenter: Kiron Kasbekar

History of Trams in India | ...

The video I am presenting to you is based on a script writt...

By Aniket Gupta | Presenter: Sheetal Gaikwad

view more