Income Computation and Disclosure Standards (ICDS) are accounting standards in India aimed at providing uniformity in the computation of income and the disclosure of financial information. Introduced by the Central Board of Direct Taxes (CBDT), ICDS is applicable to taxpayers following the mercantile system of accounting, particularly for income tax purposes.

The main objectives of ICDS are to enhance transparency, ensure consistency in accounting practices, and provide clear guidelines on how to compute income from various sources, such as business profits, capital gains, and other incomes. By standardizing the treatment of income, ICDS helps in reducing disputes and ensuring compliance with tax regulations.

The General Anti-Avoidance Rule (GAAR) is a provision in Indian tax law designed to combat tax avoidance and evasion. It empowers tax authorities to disregard transactions or arrangements that are primarily aimed at obtaining tax benefits and lack genuine commercial substance.

GAAR applies to situations where a taxpayer engages in practices that, while technically compliant with tax laws, are deemed to be artificial or contrived. If invoked, GAAR allows tax authorities to recharacterize or cancel such arrangements, ensuring that tax benefits are not obtained through means that undermine the intent of the law. This measure promotes fair tax practices and aims to protect the tax base.

Re-opening of assessment under the Income Tax Act refers to the process where the tax authorities revisit and reassess a taxpayer’s income tax return for a previous assessment year. This can occur under specific conditions, typically when new information comes to light that suggests the original assessment was incorrect or incomplete.

The key provisions for re-opening assessments are outlined in Section 147 of the Income Tax Act. It allows the Assessing Officer to initiate the re-opening if:

1. Income Escaped Assessment: There is reason to believe that income chargeable to tax has escaped assessment.
2. Time Limit: Generally, assessments can be re-opened within four years from the end of the relevant assessment year. In some cases involving fraud or misrepresentation, this period can extend to six years or more.

The process requires the issuance of a notice to the taxpayer, giving them an opportunity to respond. After evaluating the new information, the authorities can adjust the tax liability accordingly. This mechanism is aimed at ensuring that all taxable income is accurately assessed and taxed.

An Income Tax survey is an official examination conducted by tax authorities to gather information and verify the accuracy of a taxpayer’s income, expenses, and compliance with tax laws. Unlike a search and seizure operation, a survey is generally less intrusive and can take place at the taxpayer’s premises, such as a business location.

During a survey, tax officers may:

1. Review Financial Records: Examine books of accounts, documents, and other records related to income and expenses.
2. Interview Staff: Speak with employees and management to clarify business operations and financial practices.
3. Collect Data: Gather relevant information to assess the taxpayer’s compliance with tax regulations.

The purpose of a survey is to ensure that taxpayers are accurately reporting their income and paying the correct amount of tax. It helps the authorities identify discrepancies, potential tax evasion, or non-compliance issues.

Tax due diligence is a comprehensive review process conducted before a merger, acquisition, or investment to assess a target company’s tax compliance, liabilities, and overall tax position. This evaluation helps buyers or investors understand potential tax risks and implications associated with the transaction.

Key aspects of tax due diligence include:

1. Reviewing Tax Returns: Analyzing historical tax returns to identify any discrepancies or issues.
2. Assessing Tax Liabilities: Evaluating current and deferred tax liabilities, including any outstanding assessments or disputes.
3. Examining Tax Compliance: Ensuring compliance with applicable tax laws and regulations.
4. Identifying Tax Benefits: Identifying any available tax credits, carryforwards, or incentives that could impact valuation.

By conducting tax due diligence, parties can make informed decisions, negotiate better terms, and mitigate potential tax-related risks post-transaction.

A Special Audit under the Income Tax Act is a detailed examination of a taxpayer’s accounts and financial statements mandated by the tax authorities when they believe there may be discrepancies or complexities in the taxpayer’s financial records. This audit is conducted by a qualified chartered accountant appointed by the income tax department.

Key aspects of a Special Audit include:

1. Circumstances for Initiation: It can be initiated in cases where the Assessing Officer has reasons to believe that the accounts are complex or that income may have escaped assessment.

2. Scope of Audit: The audit focuses on specific issues identified by the tax authorities, such as the correctness of income, expenses, and compliance with tax regulations.

3. Timeframe: The auditor is typically required to submit a report within a specified time period, usually within 180 days of appointment.

The objective of a Special Audit is to ensure accurate assessment of tax liabilities and compliance, thereby protecting the interests of the revenue and maintaining the integrity of the tax system.