Is income tax recoverable?

The amount a company expects to get back from the state or the federal government as a result of the postponed tax losses or credits. Each company needs to report the revenue amount, or the income made in the tax year, this amount of money needn’t be same as the one in the accounting records. The business can make a decision to defer the tax benefits till they think it’s beneficial.

The unused tax credits and losses of a business can be put to use only at the time when the company has enough taxable amount of income for the future. In the same way, businesses can only carry certain tax assets forward while the tax year and is also subject to review by the tax authorities. Recoverable income taxes are in cash as it’s the amount recoverable from the government. It’s rare to find the recoverable income taxes a part of company’s assets or the balance sheet of the business.

In respect to the following, the recoverable income taxes are in the future:

1)      The deductible difference, which is temporary.

2)      The unused tax losses carried forward.

3)      The unused tax credits carried forward.

The recoverable income taxes present the effect of the  tax in depreciation and equity funds allowance, the ones used during construction.

Procedure for recovery of tax:

1)      The issue of notice: When information is drawn to the Officer for the purpose of recovery, the officer is required to send a notice (certificate) to the defaulter.

2)      Execution of Certificate: No execution occurs before a period of 15 days is over since the issue of the notice.

3)      Recovery mode: If the amount is not recovered within 15 days, the officer shall recover the money by one of the following ways:

·         Selling the defaulter’s movable property

·         Selling the defaulter’s immovable property

·         Arresting the defaulter subjecting him to prison

·         Appointing someone to manage the defaulter’s property

4)      Investigation by the officer:  The tax recovery officer can investigate any claims or objections to the property of the defaulter which is withheld.

5)      Attachment removal: Once the certificate is canceled or the amount with all the charges and the costs is paid to the officer, the attachment can be withdrawn.

6)      Selling and attachment: The selling and attachment of the defaulter’s movable and immovable property may be handled only by the people directed by the Tax recovery officer.

7)      Stoppage of the sale: The officer may stop any sale in his discretion by stating his reasons for adjournment.

8)      Bidding prohibition: No person or officer on duty in relation to the sale cannot directly or even indirectly attempt to show any interest in the property being sold.

9)      Police assistance: The officer in charge of attachment and selling of property may request for assistance from the in-charge officer of the nearest police station.

10)  Entrustment of functions:  The tax recovery officer with the previous approval of the Commissioner can entrust his functions to any other person or a person even from a lower rank than him.

Being aware of everything related to the income tax is very necessary. So, be a responsible citizen and pay your taxes on time!

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