IT Department tightens Grip on Companies Advance Tax Payments

The Income Tax Department is actively monitoring advance tax payments by scrutinising firms’ yearly and quarterly balance statements, as well as sectoral growth trends, to ensure that organisations do not postpone their tax commitments for the financial year.

According to the tax department’s core action plan for 2023-24, financial reports from the top 100 listed firms’ most recent annual reports, as well as quarterly reports throughout the year, would be scrutinised. According to this research, top officials would oversee advance tax collection, with a focus on “notes” and observations on bank accounts, if any.

Which Sectors are under Scanner?

Citing unnamed sources, tax investigators will also look at growth trends in certain industries, including real estate, pharmaceuticals, steel, mining, financial institutions, and gems and jewellery.

“It’s important to look at the balance sheets of companies in each sector to see if the payments they’re making are in line with their earnings forecast,” a tax official said on the condition of anonymity.

Advance tax payment is the practise of paying tax on income obtained in the same financial year before the conclusion of the financial year. Taxes are paid in four installments by corporations and partnership businesses on June 15, September 15, December 15, and March 15.

Companies would pay the first advance tax installment by June 15. A method has been devised to conduct quality inspections prior to escalating tax demands, with a focus on dues recovery.

According to officials, the purpose is to broaden the tax net. This action plan will place a stronger emphasis on tax collection at the source, and enforcement methods will be deployed to combat tax evasion. This is expected to grow the taxable base by 10% by 2023-24.