SELF ASSESSMENT SYSTEM(SAS)
In the 1999 budget it was announced that the official assessment system (under which taxpayer were assessed to income tax under the Income Tax Act, 1967 by the IRB based on the tax returns filed by them) was to be relpaced by the self-assessment system. There are three type taxpayer which are companies,business,partnership and co-operatives and salaried individuals. The SAS for salaried individuals, businesses and partnership was implemented from YA 2004. For the companies the year implementation is 2001 The self assessment system is essentially a process by which taxpayers are required by law to determine the taxable income, compute the tax liability and submit their tax returns based on tax laws, policy statement and guidelines issued by the tax authorities.
Basically under the self assessment system tax returns are not subject to detailed techical scrutiny by the IRB. However there is an expanded programmeof checking and verifying tax returns on a post assessment basis particulary by way of tax audits and the implementation of a penalty system to enforce compliance with tax laws.
This change was aimed at relieving the increasing workload of the IRB to allow the IRB to concentrate on areas with high tax risks and revenues. This has had a significant impact on taxpayer who must equip themselves in ensuring full disclosure as a self-assessment regime is accompanied with severe penalties for non-compliance an under-declaration of income. The Income Tax(Amendment) (No 2) Act,1999 set out the provisions for submission of tax returns, assessment of tax payable, payment of estimated tax by instalments and some penalty provisions under the self-assessment system. The self assessment system for companies was effective from year of assessment 2001. The income Tax (Amendment) Act, 2002 set out the amendments to introduce self-assessment for non-corporate taxpayers which took effect from year of assessment 2004. For companies from year...
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