Changing final tax into minimum tax regime for certain persons
Changing final tax into minimum tax regime for certain persons: Prior to Finance Act 2019, persons involved in certain transactions were not required to pay tax on their actual profit. Instead, the tax collected or deducted on such transactions was treated as their final tax liability.
Since the tax deducted was final tax, therefore, such persons were not subjected to detailed scrutiny through audit. The actual tax potential from such transactions is not realized due to presence of final tax regimes.
Final tax regime was available for commercial importers, commercial suppliers of goods, contractors, and persons deriving brokerage or commission income and persons earning income from CNG stations.
In order to tap the actual tax potential, amendments have been made through Finance Act 2019 whereby the tax collected or deducted from the aforesaid transactions shall be treated as minimum tax except for exporters, persons winning prizes and sellers of petroleum products.