Para 15.16 — CAM
Original Rule Text
15.16 TAX ACCOUNTING BASED ON ITR DATA:
15.16.1 IT Act and relevant rules do not mandate the assessee to fill up surcharge amount in the challan. This leads to huge gap between the actual surcharge amount received by the government and what is accounted for.
15.16.2 To overcome this problem, the following decision was taken with approval of the Finance Secretary for the purpose of accounting of surcharge:
i.Account of surcharge under direct tax could be done based on tax returns of the previous year ii.Department of Revenue would provide letter of authority to Principal CCA, CBDT of the surcharge amount collection and such other details as may be necessary for effecting transfer entry in the accounts. iii.The above said system has taken effect from F.Y. 2022-23
15.16.3 Consequent to the decisions in the meeting, TPL Division, CBDT, Department of Revenue, MoF issued an OM vide F.No. 370134/05/2023-TPL dated 21.03.2023 for ‘Accounting of Surcharge amount under Direct Taxes-Communication of the data as per the Income Tax Return (ITR)’ (APPENDIX 15.4).
15.16.4 In terms of the above orders, the following Transfer Entry (TE) shall be made by the Zonal Accounts Offices.
For Corporation Tax 0020.00.101.18.00.00 – Advance Payment on Corporation Tax (-) Cr. 0020.00.103.01.00.00 - Advance Tax on Corporation Tax Surcharge. Cr. For Income Tax 0021.00.102.24.00.00 – Advance Payment on Income Tax (-) Cr. 0021.00.103.05.00.00 - Advance Tax on Income Tax Surcharge. Cr.
*
Note: The adjustment (TE) will be carried out after receiving Letter of Authority from D/o Revenue and analyzing the bookings as per accounts in various Tax receipt heads
15.17 PAYMENT OF INTEREST ON DELAYED REMITTANCES
15.17.1 If there is any delay beyond the period prescribed above, i.e. T+1 working day, the banks are liable to be charged interest for delayed period. The interest for delayed remittance is to be quantified and collected from the defaulting bank by the concerned ZAOs. The rate of interest shall be charged as per guidelines issued by RBI and SoPs issued by O/o CGA from time to time.
15.17.2 The Pr.CCA, CBDT will submit a consolidated quarterly report of delayed remittances to CGA The penal interest will be worked on the basis of the rates communicated by CGA in consultation with RBI.
What This Means
Since the Income Tax Act does not require taxpayers to separately declare surcharge amounts in challans, there is a gap between the actual surcharge collected and the amount accounted for. To fix this, from FY 2022-23, surcharge accounting is done based on ITR data from the previous year. The Department of Revenue provides a letter of authority to the Pr. CCA, CBDT with the surcharge collection details, and the Zonal Accounts Offices make transfer entries to move amounts from the regular advance tax head to the surcharge head. Banks that delay remittances beyond T+1 are charged penal interest at RBI-prescribed rates.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Challans do not mandate separate surcharge entries, creating an accounting gap
- 2From FY 2022-23, surcharge is accounted based on ITR data from the previous year via transfer entries
- 3Department of Revenue issues a letter of authority to Pr. CCA with surcharge amounts for booking
- 4ZAOs make transfer entries: for Corporation Tax from 0020.00.101.18 to 0020.00.103.01; for Income Tax from 0021.00.102.24 to 0021.00.103.05
- 5Banks delaying remittances beyond T+1 face penal interest at rates prescribed by RBI and CGA
Practical Example
At the end of FY 2024-25, the Department of Revenue analyzes all ITRs and determines that Rs 800 crore of surcharge on corporation tax was collected but booked under general advance tax heads. It issues a letter of authority to the Pr. CCA. Each ZAO then passes a transfer entry: debit (minus credit) to 0020.00.101.18 (Advance Payment on Corporation Tax) and credit to 0020.00.103.01 (Advance Tax on Corporation Tax Surcharge) for its share of the Rs 800 crore.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why can't surcharge be accounted for at the time of tax payment?▼
What is the penalty for banks that delay tax remittances?▼
When did ITR-based surcharge accounting begin?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.