Income Tax Evaders? Beware!

 

The Central Board of Direct Taxes (CBDT) uses artificial intelligence and data analytics to detect cases of tax evasion. As per information in print media, IT department might deploy the non-filers monitoring system (NMS) to nudge people to file their income-tax returns. Some of the tools include:

• Statement of financial transactions
• Tax deduction at source
• Tax collected at source
• Details of foreign remittances
• Trade data and NMS.

“It is surprising that in a country of over 132 Crore population, only 8 Crore pays income-tax (in assessment year 2020-21). The number of taxpayers in the higher tax slabs are even lesser. In this digital era, detection of tax evasion is not very difficult,”.

The government may intensify its exercise to identify people who undertake high-value financial transactions but avoid filing tax returns. The move comes despite the government expecting robust income-tax collection in the financial year, as it wants to widen the tax base, which is a mere 8 Crore.

“In our country great doctors, lawyers, chartered accountants, and a number of professionals who are proficient in their respective fields, are serving the nation. But it is also a fact that there are only 2,200 professionals in the country who declare their annual income to be more than ₹1 crore,” PM had mentioned in one of the speech.

The department started an initiative where, people who do not file tax returns are asked to assess their tax liabilities for the given assessment year and either file returns or submit an online response within a stipulated time, which is generally three weeks. In case of no response, the department may initiate proceedings as per the law.

As on mid-March 2022, over 6.63 crore tax returns have been filed for assessment year 2021-22, which shows less than 3% growth compared to the same period the previous year, according to latest official data.

The net direct tax collection up to mid-March for financial year 2021-22, however, showed over 48% jump at ₹13.63 lakh crore, compared to ₹9.18 lakh crore in the corresponding period of the preceding financial year.

The net direct tax collection of ₹13.63 lakh crore on March 16 includes corporation income-tax at ₹7.19 lakh crore and personal income-tax, including security transaction tax at ₹6.40 lakh crore, according to CBDT. The net collection in 2021-22 so far is over 9% higher than the revised estimate of ₹12.50 lakh crore.

The gross direct tax collection before adjusting refunds, for 2021-22 was ₹15.50 lakh crore on March 16, compared to ₹11.20 lakh crore in the corresponding period of the preceding financial year.

DISCLAIMER
[The view presented in above blog/ article is from North Pole Management LLP. We believe that the views put forward are is in sync with applicable laws & regulations prevailing at present. Any discrimination, if found by reader can be reached out to the management of the company on the email ID of contact@northpolemanagement.in 
One is always welcome to reach out to us for any assistance, help or for advisory services in relation to the above mentioned topic in this article or any related topics relevant to us]

Provision, Contingent Liability and Contingent Assets

 Provision:

• A liability of uncertain timing or amount.
• A present obligation (legal or constructive) has arisen as a result of a past event (the obligating event),
• Payment is probable ('more likely than not'), and
• The amount can be estimated reliably.

Recognition of a provision:

• A provision should be recognised when:
• An entity has a present obligation (legal or constructive) as a result of a past event;
• It is probable that an outflow of resources embodying economic benefits will be required to settle the obligations; and
• A reliable estimate can be made of the amount of the obligation 

      If these conditions are not met, no provision should be recognised.

      Contingent Liability:

• A possible obligation depending on whether some uncertain future event occurs, or
• A present obligation but payment is not probable or the amount cannot be measured reliably

   

    Contingent Asset:

     An entity should not recognized a contingent asset.

     Contingent assets usually arises from unplanned or other unexpected events that give rise to the possibility of an economic benefits to the entity.

     Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realized.

     However, when the realization of the income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. 

     A contingent asset should be disclosed, where an inflow of economic benefits is probable.

     Contingent asset are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognized in the financial statements of the period in which the change occurs.

       Significant difference in IND AS 37 VIS-À-VIS AS 29

DISCLAIMER
[The view presented in above blog/ article is from North Pole Management LLP. We believe that the views put forward are is in sync with applicable laws & regulations prevailing at present. Any discrimination, if found by reader can be reached out to the management of the company on the email ID of contact@northpolemanagement.in 
One is always welcome to reach out to us for any assistance, help or for advisory services in relation to the above mentioned topic in this article or any related topics relevant to us]

Presentation of Financial Statement

General purpose financial statements are those intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs.

Objectives:

It sets out overall requirements for the presentation of financial statements, guild lines for their structure and minimum requirements for their content.

 Purpose of Financial Statements:

The objective of general purpose financial statements is to provide information about the financial position, performance, and cash flow of an entity that is useful to wide range of users in making economic decisions. To meet the objective, financial statements provide information about entities:

·       Assets

·       Liability

·       Equity

·       Income and expenses, including gains and losses

·       Contributions by and distributions to owners in their capacity as owners; and

·       Cash flows 

     Set of Financial Statements

General features of Financial Statement

DISCLAIMER
[The view presented in above blog/ article is from North Pole Management LLP. We believe that the views put forward are is in sync with applicable laws & regulations prevailing at present. Any discrimination, if found by reader can be reached out to the management of the company on the email ID of contact@northpolemanagement.in 
One is always welcome to reach out to us for any assistance, help or for advisory services in relation to the above mentioned topic in this article or any related topics relevant to us]

Compliance Calendar for the Month of March 2022

 

DISCLAIMER
[The view presented in above blog/ article is from North Pole Management LLP. We believe that the views put forward are is in sync with applicable laws & regulations prevailing at present. Any discrimination, if found by reader can be reached out to the management of the company on the email ID of contact@northpolemanagement.in 
One is always welcome to reach out to us for any assistance, help or for advisory services in relation to the above mentioned topic in this article or any related topics relevant to us]