Finance Minister Nirmala Sitharaman on Monday stated the increase in the Tax Audit Limit raised to Rs.10 crores for those utilizing Digital Transaction Mode.
The objective behind the rise in the Tax Audit Limit is to encourage digital transactions. This move of the government has delivered a setback to several tax audit firms and at the same time, it is the most welcomed step of the government for small and medium businesses.
“Currently, if your turnover surpasses 1 crore, you have to get your accounts audited. In the February 2020 Budget, I had raised the limit for tax audit to `5 crores for those who perform 95% of their transactions digitally. I propose to raise this limit for tax audit for such persons from `5 crores to `10 crore,” Finance Minister in her Budget 2021-22 speech stated. This was done to further incentivize digital transactions and decrease the compliance burden.
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Sitharaman also recorded that the government had taken various steps to clarify the tax regime, which was started about four years ago.
Some of the steps the Center has practiced involve smoothening the creases in the system include-nil return through SMS, quarterly return. It also involves monthly payment for small taxpayers, an electronic invoice system, authorized input tax statement, pre-filled editable GST return, amongst other things.
The Finance Minister also stated that senior citizens over 75 years with only pension income have been released from filing I-T returns. This has been done seeing that the number of income tax return filers has grown to 6.48 crores now from 3.48 crores in 2014.
She further stated that to create a conflict resolution for small taxpayers that will be faceless to assure efficiency, clarity, and accountability.
“As I mentioned previously, post-pandemic, a new world order appears to be rising, one in which Asia is poised to hold a prominent position and India will have a leading role therein. In this situation, our tax system has to be transparent, effective, and should encourage investments and employment in our country,” she said while stating the tax reforms.
Sitharaman further continued the GSTN system has also been improved and technologies like deep analytics and artificial intelligence have been used to recognize and control the number of tax evaders and false billers.
Most of the CAs has opined that the circumstances in which the Business Houses in India are operating, they cannot operate through only bank mode. They have to utilize cash be it the payment of salary to the employees and other payments which are frequently done in cash. So it would not affect the CAs widely.
However, it is said that the deletion of the GST return Audit would have an adverse effect on the CAs.
“Audit Limit Extends to 10 Crore if a transaction is Digital #Budget2021.
Only 1% will come in the digital section. No Effect as such on Tax Audits,” one of the CA tweed.
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