Accountancy Forum

Dear Members

I hope that every one will be fine and will enjoying the holy month of Ramazan. As you know that 30th September is the last date for filing of individual return, so every one will be busy now a day. However, I shall be thankful if time is given to answer my question.

My question is regarding the tax deducted at source on telephone & Electricity bills of an individual. I am asking whether an individual can adjust the tax deducted on his utilities bills while presenting his annual income tax return or not. The confusion has arisen as this kind of tax is declared as minimum tax in the budget 2008. Please also discuss the above statement (minimum tax) shown in the budget 2008.

Best Wishes
Zia ur Rahman

Dear,

First of all I would like to correct you that the change discussed by you has been made a part of Finance Bill 2007 that after its approval has become Finance Act 2007. Further, it is in respect of income tax collected on electricity and not on telephone. However, the change being discussed would be applicable from the tax year 2008.

A new sub-section (4) has been added to section 235 of the ITO 2001 which requires to treat the tax collected on the amount of electricity bill from a commercial or industrial consumer (OTHER THAN A COMPANY) as minimum tax on the income of such person.

If the tax collected from such consumer under this head is more than the actual tax liability of such consumer for the tax year, the excess amount will not be refunded to him.

Minimum tax means the minimum liability of tax for a given tax year. It has nothing to do with the maximum tax which may be payable where it is more than such minimum tax.

If such consumer's actual income tax liability for the tax year would be greater than the amount of tax with-held / collecetd against the electricity bills, of course this amount would be adjustable against the total income tax liability.

But, where the amount of income tax liability payable by such a consumer for the tax year based upon normal calculation of tax liability would be lesser than the amount of tax with-held / collected against electricity bills, the minimum tax would be the tax liability for that tax year. And in such a case the amount of tax with-held/collected on electricity bills over the amount of actual payable tax will not be refunded to such consumer.

You must keep in mind that this change is effective from next year and has no bearings to the income tax returns you are going to file within this september.

Further, it is not applicable to the companies irrespective of whatever business they are carrying out.


Best regards,


Kamran.

Dear Kamran Sahib

Thank you very much for your correction and for your quick reply.

Zia ur Rahman