The CBDT had proposed a draft notification for creating a mechanism for self-reporting of the estimated current income and taxes. The assessees for such reporting are taxpayers, viz companies and people (individuals, firm, etc.) to whom tax audit cases are applicable by voluntary compliance.
Additional compliance burden has been placed by this proposed rule on the taxpayers and they are required to furnish the Estimated Income and Tax Liability as on 30th September of the previous year. The intimation for the same is required to be furnished on or before 15th November of the previous year.
However, if the income estimated is less than the income of the preceding financial year by Rs. 5 lakh or 10 per cent, whichever is higher, then the estimated income and the tax liability as on 31st December of the previous year should be furnished on or before the due date of 31st January of the previous year.
There are two reasons for introducing this provision as given by the CBDT:
Additional burden on the account of interest for default or deferment of the advance tax payment can be avoided if the taxpayers arrive at an accurate estimate of their income and advance tax liability.
Prioritising and planning the Government expenses can be provided easily after a reliable and advance estimate of tax revenues for the year.