Is extension of due dates – A tool of politics in India
As an accountant in the industry, I realize that the main reason of extension of due dates of filing of tax returns in India almost every year is simply due to exemption of interest on balance tax paid by the due date or actual date of filing of tax return by the assessee or by his advocate as the case may be.
In a simple example, if I pay balance tax payable for FY 2017-18 (upto 31-03-18) by the return filing date of 30-09-2018 and file the return also, I will pay no interest on self-assessment tax paid by the due date of filing return. However in terms of Sec 234 A/B/C, I will pay interest on short payment of advance tax payable by me for 2017-18 upto the date of payment of self-assessment tax also.
Therefore exemption of interest on self-assessment tax upto date of filing of return is not so heavy, but it has created so heavy problem in India that we defer the payment of taxes till last dates, do not complete books of accounts and audit where required, create fake data in books to reduce the tax liability and start demanding the extension of due dates of filing returns every time.
It should be the greatest mockery in the country that we do not complete our books and records of 31st March even by 30th Sept and every time demand extension and exemptions.
Therefore, in my opinion, CBDT must amend the law to provide that –
All taxes payable for an FY must be paid without interest by the 30th April of AY after adjusting TDS and Advance Tax paid if any during FY in final tax liability and balance tax payable if any must be paid without interest by 30th April.
All refund claimed in the tax return of any FY should be paid by the government with interest from the date of filing of return upto the date of payment.
All interest rates must be made uniform and simple, calculated on the basis of the period involved. From date of creation of liability to date of payment. In the era of computers, electronic gadgets and worksheets, it is simply foolish to cry for simple method of calculation of interest on monthly rests and provide a grace period on month basis. Presently tax dues of a month are payable by 7th of next month, therefore you avail credit period of 37 days for sale made on the 1st day of the month and only 7 days credit for the sale made on last day of the month. However, in principle, you must avail uniform credit of each transaction for tax payment. In olden days banks were calculating interest on the basis of pre-printed tables and monthly rests due to manual working, but now a day all banks are computerized and calculate interest on a day basis. Why can’t it be programmed in tax websites also?
If the tax returns to be filed are separated from tax payment, the penalty to default in filing return will become independent and strict. People will pay tax efficiently and will claim refund efficiently to get more interest at the same rate. Govt will also maintain tax sites properly to reduce its interest liability.