In a circular to excise and service tax chief commissioners, the Central Board of Excise and Customs (CBEC) said there are “apprehensions” that an increased turnover because of use of digital modes of payment may lead to demands for the earlier period.
“It is, hereby, clarified that in indirect taxes, past assessments will not be reopened for this reason alone,” the CBEC said.
Ever since the demonetisation announcement on November 8, in order to curb generation of black money, the government has been taking steps to encourage people to shift towards digital mode of payment while making financial transactions.
“By adopting a digital mode of payment, no financial transaction would remain undisclosed and consequently an enhanced turnover might get reflected in the books of accounts,” the CBEC said.
In a similar circular, the policy-making body of the Income Tax Department – the Central Board of Direct Taxes – had last week assured assessees that taxmen will not reopen their past cases on mere spurt in turnover because of digital payments.