ASSESSMENT AND RETURNS OF INCOME

Introduction
Subdivision ‘A’ of Division IV of Part VII of the Act consisting of sections 91 TO 93 (both inclusive) deals
with returns of income

The term 'return of income' is defined in section 3 of the Act to mean the 'meaning' ascribed to it by section
91

Returns of Income [section 91]

This section requires (subject to sections 92, 93, and 95) every person to file with the Commissioner a return
of income for the year of income not later than six months after the end of each year of income. This is the
final or regular or actual return of income, i.e. after the end of the accounting period and final/books of
accounts are completed

Section 88 of the Act deals with Income tax payable by quarterly installments (whether from a business,
investment or employment provided employer is not required to withhold tax under section 81). This
necessitates the first type of return of income which should be submitted as ‘provision’ before the final
return. This is what is called ‘statement of estimated tax payable/provisional return’ as required under
section
89 (1). Note that, once a taxpayer furnishes provisional return of income, he is automatically assessed and
therefore the due dates for submitting provisional return and paying provisional tax are the same.

Due date(s) for submitting/paying Provisional return/tax excluding withholding taxes by employees:
(i) Where a year of income of a person is twelve month period and coincides with the calendar year:
 On or before the third, sixth, ninth and twelfth months of the year of income (i.e. 31 st March,
30th June, 30th September and 31st December)

(ii) In any other case (where does not coincide with calendar year):
 At the end of each three-months commencing at the beginning of the year of income

Note:
 Year of income for every person means 'calendar year' [section 20]
 Provisional return is submitted as the total estimated chargeable income for the year of income but
provisional taxes for the year of income are payable on four (quarterly) equal installments

Returns of Income Requirements [s.91 (2)]

A return of income of a person for a year of income is required to specify:
(i) Chargeable income (employment, business and investment)
(ii) Total income and the income tax payable with respect to that income
(iii) For domestic permanent establishment of a non-resident person, the permanent establishment’s
repatriated income and the income tax payable
(iv) Any income tax paid by withholding, installment or assessment for which a tax credit is available
under sections 87, 88, 90, or 95
(v) Amount of tax still to be paid calculated from above as [(ii) + (iii)] – (iv)
(vi) Any information as may be prescribed by the Commissioner

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Notice by the Commissioner [s. 91 (3)]
A Commissioner may, by notice in writing serve a notice on the person requiring him to file a return of
income by the date specified in the notice for the year of income or the part of the year of the income

This occurs where, prior to the date for filing a return of income the following situations exists:
- A person becomes bankrupt, is wound up or goes into liquidation;
- Person is about to leave URT indefinitely;
- A person is about to cease activity in URT;
- Commissioner otherwise considers it appropriate

Return of Income excludes:

(i) An income of resident individual who has no income tax payable;
(ii) Income of resident individual whose income is either from employment (where employer is
required to withhold tax under s.81) or derives a gain in conducting an investment from the
realization of an interest in land or buildings situated in URT [“Single installment at time of
realization or receipt”-sections 90(1) and 92 (a) (bb)]
(iii) A return of income of a non-resident person (other than one with a domestic permanent
establishment) who has no income tax payable under s. 4 (1) (a) or consists exclusively of gains
under s.90 (1)

Extension of time to file a return of income (s.93)

Subject to a written application from the taxpayer, Commissioner may grant multiple extensions but the
extensions shall not in total exceed 60 days from the original date where the estimate/returns were to be
filed

Assessment of tax

Introduction
Subdivision B of Part VII of the Act consisting of sections 94 to 97 (both inclusive) deals with assessments.
The term 'Assessment' is defined in section 3 of the Act to mean "an assessment under sections 94, 95, 96
or 103 of the Act"

Note however that the term assessment is capable of several interpretations. It may mean:
 Computation of income of a taxpayer; or
 Determination of the amount of income tax payable; or
 Entire procedure for imposing liability on the taxpayer as laid down in the Act

But briefly, in widest sense the term assessment covers the whole process of scrutiny of the return of income, if any,
submitted by the taxpayer, examination of his books of account, if necessary, and if any, up to the last step of issuing
a notice of assessment showing the income assessed, the tax payable and the due date for payment

Thus, entire procedure for imposing liability on the taxpayer requires three (3) steps to be completed:

(i) Computation of the income assessable /taxable income;

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(ii) Computation of the income-tax payable by taxpayer on the basis of computed income in (i) and the
appropriate rate; and
(iii) To issue a notice of assessment intimating the fact of assessment made on him (this notice shows
details of income assessed, gross tax payable, the reliefs, if any, given the set-off or credit of tax
deducted at source or already paid, net amount of tax payable and the due date of payment)

Types of Assessment under the Act

a) Statement of estimated tax payable or Provisional assessment [Section 89]
b) Self-assessment [Section 94]
c) Jeopardy or Accelerated assessment [Section 95]
d) Adjusted assessment [Section 96]
e) Best judgment assessment [Section 94 (4) (a)]

Basis of Classification
Types of assessments may be classified on the basis of the following:
(i) Assessments by the Commissioner and assessment by taxpayer himself; or
(ii) Returns submitted by the taxpayer or without such returns; or
(iii) Acceptance of the income returned or amendment (or rejection) of the income returned by the
taxpayer, i.e. best judgment assessments; or
(iv) Assessments made to save possible loss of revenue on account of the occurrence of some event or
accelerated due to certain peculiar circumstances of the taxpayer (i.e. Jeopardy or accelerated
assessments); or
(v) Regular assessments made for the first time; or
(vi) Exceptional or irregular assessments made after completion of the original assessments (i.e.
additional or amended assessments)

(a) Statement of estimated tax payable (Provisional Assessment)

The statement of estimated tax payable (provisional assessment) is required to be submitted by a
taxpayer under sub-section (1) of section 89 of the Act

When a taxpayer has furnished a statement of estimated tax payable he is automatically deemed to
have been provisionally assessed on the basis of estimates contained in such in such statement as
provided in sub-section (3) of section 89 of the Act.

Thus, the responsibility of the taxpayer is over once he submits a statement of estimated tax payable.
The Commissioner is not required to inquire into the correctness or accuracy of the estimates of the
income stated by the taxpayer though he will obvious watch the payment of tax required from such
statement of income. As such, no formal order of assessments is required to be made by the
Commissioner in these types of assessments, i.e. where the taxpayer submits a
Statement

Section 89 (5) gives room to person who has submitted a statement of estimated tax payable to
revise/amend a previously submitted statement of estimated tax payable under section 89 (1)

Where, however, the taxpayer fails to comply with section 89(1) of the Act and fails to submit a
statement of the estimated tax payable, sub-section (8) of section 89 of the Act authorises (empowers)

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 the Commissioner to estimate the income of such person and tax payable accordingly. Note that the
Commissioner makes such assessments when he considers that such taxpayer has or will have income
chargeable to tax for such year of income, and such estimate is based on the best judgment of the
Commissioner

(b) Self- assessment

Sub-section (1) of section 94 of the Act deals with self-assessments. Where an entity (individuals are
excluded) files a return of income for year of income an assessment shall be treated as made on the due
date for filing the return of the income tax payable on total income (in this case, business income and
investment income) and repatriated income.

Entities are therefore required to include in the return and accounts submitted to the Commissioner
the computation of tax payable from the taxable income reflected in such returns. Note that the said
tax computation is referred to as a self-assessment for income tax purpose, and the amount of tax
shown as payable in the return is referred to as the tax payable on the assessment

The concept of self-assessment, however, does not apply to individuals. Section 94 (4) requires the
Commissioner to assess an individual upon filing the return of income. If he has accepted the return,
then he should assess such person basing on such return. Here the Commissioner will make the normal
add back disallowable and deduct allowable by using the return figures

c) Best judgment assessment

If Commissioner is satisfied that the return of income submitted by an individual is true and correct,
he may accept the income returned and make an assessment under section 94 (4) (a)

If the Commissioner is not satisfied that the return of income is correct and complete, he has the power
to estimate income of the taxpayer to the best of his judgment and make an assessment accordingly

A best judgment assessment under the Act can be made with or without a return of income; with or
without the regular books of accounts; with or without the irregular or incomplete books of accounts;
or with or without the presence of the taxpayer. A best judgment assessment is comparatively easy
when the taxpayer has submitted a return of income and it is necessitated due the omission on the part
of the taxpayer or due to return not being true and correct. A return may not be true and correct if the
taxpayer has not maintained any books of accounts at all, or even if he has maintained them, they are
not reliable or acceptable to the Commissioner

Note further that sub-section (5) of section 94 of the Act also deals with regular assessments, which
are made on a best judgment assessment basis. It deals with those cases of individuals who do not
submit returns of income as required under section 91 of the Act. According to this provision, it is
immaterial whether the Commissioner has required the taxpayer to submit a return of income or not.
Once the Commissioner is satisfied that an individual has income which is chargeable to tax and it is
proved that the individual has defaulted in submitting his return of income in the year of income,
Commissioner has the right to estimate his income to the best of his judgment and make an assessment
accordingly

d) Jeopardy or Accelerated Assessment

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 Section 95 of the Act deals with persons (both, individuals and entities), who are about to leave the
United republic permanently; be bankrupt, wounding up or going into liquidation; or cease an activity
in the United Republic, and sometimes if the Commissioner considers it appropriate

The section is specifically enacted to safeguard revenue by authorising the Commissioner to make an
accelerated assessment

Note that if normal time for filing return is allowed and normal procedures are followed (as specified
under section 94 of the Act), it will be very difficult for the Income Tax Department to locate the
taxpayer or collect the due income tax from a taxpayer who has already or is about to leave the
jurisdiction of the United Republic (e.g. follow up may be restricted by general principles of private
internal law)

e) Adjusted Assessment
Section 96 of the Act empowers the Commissioner to adjust any assessment made under section 94 and
95, that is, self-assessment, regular assessment made to an individual and jeopardy assessment in such
manner as, according to the Commissioner's best judgment and information reasonably available

To adjust here, implies that the Commissioner may amend or issue an additional assessment where
there is existing assessment made to any person. The section is giving powers to the Commissioner to
lower or increase the already existing tax liability of any person

Section 96 (2) limits the time of making adjustment to be within three years after the due date of filing
the return to which the assessments relate or in those cases where the Commissioner has required the
submission of those returns

Sub-section (3) of section 96, however, empowers the Commissioner to adjust any assessment even
after the expiry of three years if the person whose assessment is being adjusted failed to file a return
of income as required under section 91 where the Commissioner believes that the assessment to be
adjusted is inaccurate by reason of fraud by or on behalf of the assessed person

Cases which will be the subject of additional assessment

(i) Gains or profits from any source of income liable to income tax should have been under-assessed;
or
(ii) Have been assessed at too low a rate of income tax; or
(iii) Have been made the subject of excessive relief; or
(iv) Excessive deficit(loss) has been computed; or
(v) Excessive deductions under the third schedule of the Act have been allowed

Non-Compliance
Introduction
The provisions on non-compliance are found in Part XIII of the Income Tax Act 2004, which runs from
section 98 through section 124. The scope of our discussion is on Divisions I and II of this part of the
Act which deal with interest and penalties, and offences for non-compliance. These divisions run from
section 98 through section 109

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Types of failure or non-compliance
a) Failure to maintain proper documents or file a statement of estimate for year of income or file a
return of income as per sections 80, 89(1) and 91 (1);
b) Understating tax payable by installment;
c) Failure to pay tax on or before due date;
d) Making false or misleading statements;
e) Aiding and abetting

Interest and Penalties [Division I of Part XIII]:

Penalty for failure to maintain proper documents or file statement or return of income [S. 98]

For each month and part of a month during which such failure continues the HIGHER of:
 2.5% of the difference between the income tax payable for year of income and the amount of that
tax that has been paid at the start of the month; OR
 Tshs. 10,000 in the case of an individual or Shs. 100,000 in the case a corporation

Understating tax payable by installment [S. 99]

In instances where a taxpayer pays taxes in installments, and that his estimate of income tax payable
for a year of income under section 89 (which will be used to calculate income tax installments payable
under section 88) is less than 80% of the income tax payable for a year of income as 'correct amount',
such taxpayer will be liable for interest for each month or part of the month from the date the first installment for
the year of income is payable until the due date by which the person is required to file a return of income under
section 91 (1)

Amount of interest payable is calculated as statutory rate, compounded monthly applied to the excess
of-
 Total amount that would have been paid by way of installment to the start of the period on 'correct
amount' basis; over
 Amount of income tax paid by installments to the start of the period

Failure to pay tax on or before due date [S. 100]

Liable for interest for each month or part of a month ('the period') for which tax remain outstanding at
the start of the period, calculated as the statutory rate, compounded monthly applied to the amount
outstanding at the start of the period

Penalty for making false or misleading statements [S. 101 (1)]

 Where a statement or omission is made without reasonable excuse:
50% of the underpayment of the tax that, in the CIT's view would have resulted if the inaccuracy
had gone undetected
 Where a statement or omission is made knowingly or recklessly:
100% of the underpayment, where the views of CIT are as above

Penalty for aiding and abetting [S. 102]

Where a person willfully or negligently aids, abets, conceals or induces another person to commit any
offence under Division II of Part XIII of the Act, in the first place, itself is an offence
 Penalty equal to 100% of the underpayment given similar view as in (d) above

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Assessment of Interest and Penalties
The imposition of interests and penalties is in addition to any other tax imposed by the Act. Under S. 103
(3) a person is not relieved from criminal proceedings under Division II of Part XIII, which deals with
offences.

S. 103 (4) provides for notice requirements where assessment for interest or penalty is made. The
Commissioner is required to serve a written notice of assessment on the person setting out the assessment,
the mode of calculation of the assessment, reason for the assessment, date of payment, and the time, place
and manner of objecting to the assessment

Offences [Division II of Part XIII]

Introduction
The Act, apart from providing for interests and penalties as sanctions for contravention, it also criminalizes
certain conduct. Thus, one may be liable for interest/penalty and criminal proceedings for the same failure
or offence

Offences
a) Failure to comply with the provisions of the Act is an offence under section 104, and the provision
provides for the penalty for the person being summarily convicted

b) Failure to pay tax on or before due date without a reasonable excuse is an offence and such person will
become criminally liable upon summary conviction as stipulated in section 105The section also
provides for the penalties

c) The offence of making false or misleading statements is provided for section 106, which also provides
for the punishment upon summary conviction

d) Impeding tax administration is an offence under section 107. The offence is committed by obstructing
or attempting to obstruct an officer of the TRA to carry out his/her duties under the Act or through
failure to comply with a notice issued under section 139 (which empowers the Commissioner to inquire
any information from the taxpayer)

e) Section 108 creates offences on the part of TRA officers, other authorized and unauthorized officers.
The section deals with asking or taking any payment or reward (bribe/corruption) by officers in the
course of their duties and conduct that may cause the Government to be defrauded such as concealing
information, etc. in the case of unauthorized officers. The section also deals with unauthorized offices
who collect or attempt to collect taxes

Section 108 (2) creates an offence out of breach of confidentiality, i.e. reveling information contrary to
section 140 (requires authorized officers under or instructed with the Act to keep official secrecy)

f) Aiding, abetting, concealing, aiding or inducing a person willfully or negligently to commit an offence
under the Act is an offence

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Illustration
Assume the usual accounting period of the Great Co. Ltd ends on 31 st December of each year. During the
year of income 2015, the company fails to file/furnish the statement of estimated income on the due date.
However, on 30/9/2015, the company files the estimated income of shs. 10,000,000.

Unfortunately, the company also, delayed the submission of the return of income which is submitted on
30/9/2016 showing an income tax amounting to shs. 4 million. The corporation tax rate is 30%.

Required
Compute penalties if any payable under section 98(1) of the ITA 2004.
Feedback
Year of income: 1/1/2015 to 31/12/2015
Due date for filing estimate: 31/3/2015
Date the estimate filed: 30/9/2015, (there is failure)

Due date for filing the return of income: 30/6/2016

Date the return filed: 30/9/2016 (there is failure as well)

Type of Failure and its penalty:

Failure to file statement of estimated income
Due date: 31/3/2015
End of failure: 30/9/2015
Duration: 6 months
Income tax payable on the income as per s. 4(1) (a) and (b)
= shs. 10,000,000 x 30% = shs. 3,000,000
Income tax paid at the start of the month = NIL

Penalty:
= (3,000,000-0) x 2.5% x 6 months = 450,000 or 15 x15000x6. whichever is greater.
The greater (penalty) is shs. 1,350,000

Failure to file the return of income:

Due date: 30/6/2016
End of failure: 30/9/2016
Duration: 3 months
Income tax payable shs. 4,000,000.
Tax paid out of it at te start of month: - NIL
Penalty:
Shs. (4,000,000 – 3,000,000) x 2.5% x 3month = shs. 75,000
Compare with shs. 15x15000x3 take the greater.
Penalty = shs. 675,000

Penalty for Making False or Misleading Statements

Interest payable on under-estimation of estimated tax (s. 99)

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If estimated income tax payable for a year of income is less than 80% of the income tax payable (correct
amount of final tax), the installment payer (taxpayer) shall be liable for interest for each month or part of a
month (the period) from the date the first installment for the year of income is payable until the due date
by which the person must file a return of income for that year of income. The rate of interest is the statutory
rate compounded monthly on the difference between the correct final tax and the amount of income tax
paid by installment during the year of income to the start of the period.

Example
Assume the same facts as for example 7 except that the BOT discount rate 1st January, 2005 is 14.6%, which
is equivalent to a monthly rate of 1.22%.
Is there interest payable for under-estimation of estimated tax as per s. 99?

Feedback
Correct (final) tax = shs. 4,000,000
Income tax paid by installment = shs. 3,000,000
80% of correct tax i.e. 80% x 4,000,000 = shs. 3,200,000.
Since shs. 3,200,000 is less than shs. 3,000,000, then interest will be computed as follows:

Date of 1rst installment = 31/3/2015

Date of filing return of income 30/6/2016,
Duration = 15 months (periods)

Difference of tax: 4,000,000 – 3,000,000 = shs. 1,000,000

Interest:
1st period, shs. 1,000,000 x 1.22% = shs. 12,200.00
2 period(month) (1,000,000 + 12,200) x 1.22% =
nd 12,348.84
3rd period…
Etc. to 15th period

Or
FVn = PV (1+i) n

Where:
FVn = Future value at the end of periods n
PV = Present value
i = interest rate per period
n = number of periods

If you use the table, the following formula is applicable:

FVn = PV (FVFi,n)
FVFi,n = Future Value Factor for interest, i, and periods, n.

Therefore the interst may be computed as follows:

FV = ?
PV = shs. 1,000,000

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n = 15 months
i = 14.6%/12 months = 1.22% per month.

FV15 = shs. 1,000,000(1+0.0122)15

= 1,000,000 x 1.199485 = 1,199485
Interest = shs. 1,199,485 – shs. 1,000,000 = shs. 199,485

Illustration 2
Assume the usual accounting period of the Precious Co. Ltd ends on 31 st December of each year. During
the year of income 2015, the company fails to file/furnish the statement of estimated income on the due
date. However, on 30/9/2015, the company files the estimated income of shs. 10,000,000.
Unfortunately, the company also, delayed the submission of the return of income which is submitted on
30/9/2016 showing an income tax amounting to shs. 4 million. The corporation tax rate is 30%.

Required
Compute penalties if any payable under section 98(1) of the ITA 2004

Feedback

Year of income: 1/1/2015 to 31/12/2015

Due date for filing estimate: 31/3/2015
Date the estimate filed: 30/9/2015, (there is failure)

Due date for filing the return of income: 30/6/2016

Date the return filed: 30/9/2016 (there is failure as well)

Type of Failure and its penalty:

Failure to file statement of estimated income
Due date: 31/3/2015
End of failure: 30/9/2015
Duration: 6 months
Income tax payable on the income as per s. 4(1)(a) and (b)
= shs. 10,000,000 x 30% = shs. 3,000,000
Income tax paid at the start of the month = NIL

Penalty:

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 REVIEW QUESTIONS

Question one
A Commissioner may by notice in writing serve a notice on the person requiring him to file a return of
income by the date specified in the notice for a year of income or the part of the year of income

Under what circumstances is the Commissioner for ITA allowed to exercise this power?

Question Two
What is the distinction between terms “charge” and “assess” as used under ITA 2004?

Question Three
Discuss different types of assessments under ITA 2004

Question Four
Under what circumstances will the Commissioner for ITA issue the following assessment?
 An additional assessment
 An amended assessment

Question Five
a. Why the employees are generally exempt from being formally issued with notices of assessments?
b. State the circumstances under which an assessment may be raised on an employee

Question Six
The twelve months accounting period of the Mwagalla Trading Company normally ends on the 31ST
October of the calendar year. For the year of income 2004, the company did not furnish its provisional;
returns despite repeated reminders from the Commissioner.

The company finally decided to furnish the final returns for 2004 on 15th June 2005 for income of Tshs. 200
million. The Commissioner made best judgment assessment for the year on 30 th September 2005 of an
income of Tshs 400 million

Assuming the company intends to liquidate the full liability for the year of income 2004 on the 8th
November 2005

Required:
Compute the total tax due and payable on that date (Quote the relevant sections of the ITA 2004 in
answering the questions)

Question Seven
ABC Ltd was provisionally assessed to tax of shs.5, 850,000 on the 15th April 2011 for the 2011 year of
income, after having failed to furnish such a return despite having been required to do so by the
Commissioner. The company’s twelve months accounting period normally runs from 1 st September of each
Calendar year

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On 1st December 2011 the Commissioner served the Company with notice requiring it to furnish the regular
return of income for the year 20101 within 40 days of that date

The company paid the full taxes on the provisional return for the year 2011 on 15th June 2011. However, it
furnished the final return for the year on the 20th may 2012, which declared an income attracting tax of shs.
12,000,000

On 30th July 2012 Commissioner made an assessment on the Company for the year 2011 of shs. 26,540,000

Required:
On the basis of ITA 2004 provisions, calculate the tax payable by the Company (including the penalties) for
the year of income 20101 (Ignore section 100 interest in respect of the provisional taxes)

Question Eight
Managua Company Limited (‘MCL’), a resident corporation conducting the business of rendering of
construction, returned an estimate of tax payable of shillings 50,000,000 starting December 1, 2005. The final
accounts of the business are made up to November 30 each year. The company has also properties leased
to third parties and that withholding tax applies on payment of rentals.
For the same YOI, MCL received the gross amounts of rental income as follows: -
January 2006: shillings 3,000,000.00; March 2006: shillings 4,500,000.00 and October 2006: shillings
600,000.00.

All rentals were subjected to withholding tax at the prevailing WHT rates.

On the October 1, 2006, MFL filed a revised estimate of tax payable reflecting reduction of tax payable of
shillings 13,500,000.00

The tax officer in charge of returns refused to accept such amendment on account that the law does not
give room for reducing tax estimate.
Required
1. Determine the due date for filling the estimate of tax payable; and
2. Compute the amount of each installment and respective due dates;
3. Advice both the tax officer and taxpayer as regards to rights to revise the estimated tax payable.
Question nine
Manero Mango Farms (‘MMF’) is resident company conducting agricultural business and producing raw
palm oil in its plantations in Kisarawe, Tanzania. For the YOI ending on March 30, 2007 the company
returned an estimated tax payable of shillings 5,000,000.00.

Due to favorable market conditions, MMF filed a revised estimate of taxable income to shillings
21,000,000.00 on December 1, 2006. During the month of February 2007, the MMF realized the market
conditions were not in their favour and filed a revised estimate of tax payable to 5,200,000.00.

Required
1. Determine the date filling the statement of tax payable; and
2. Tax installments along with respective due dates

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Question Ten
Chaganyikeni Investments (KI) is tuition provider registered in Tanzania. KI accounts are made up to 31
December each year. Joti, the company accountant who studied accountancy at Kariakoo Business School,
realized that the ITA, 2004 requires each company to file with CIT estimated tax payable for each YOI and
in accordance to section 58 of the ITA 1973. On April 13, 2006, Joti filed a statement of tax payable showing
taxable income of shillings 45,000,000.00.

On August 1, 2006 the company filed a revised estimate of tax payable reflecting a tax payable of TShs
16,200,000.00. KI paid required installments as required by section 88 of ITA 2004.

KCL has paid taxes in Kenya and Malawi as follows:

February 2006: TShs 250,000.00; July 2006: TShs 340,000.00

On October 4, 2007, Masanja the company director received a notice from the CIT informing him of his
failure to file an estimate of tax payable in accordance with section 89 (1) (b) of the ITA 2004. The notice
also revealed that the CIT has estimated the tax payable of KI as shillings 20,000,000.00.

Required
1. Compute amounts paid by KI before receiving the notice for the CIT,
2. Determine the due dates for the payment of the above installments;
3. The respective shortfall the CIT may demand at each installments due date.

Question Eleven
Oceania Television Network (‘OTN’), a television network operating in Zanzibar, filed a return of income
with LTD offices in Dar. The company makes it accounts up to September 30 each year. For the years of
income 2005 and 2006, OTN filed return of income on July 2006 and August 2007 respectively. The
chargeable income as determined by the CIT on October 5, 2007 is TShs 245 million for 2005 and TShs 456
million for 2006.

For both years of income, OTN paid tax installments amounting to TShs 156 million and 219 million for
2005 and 2006 respectively. The statutory rate for 2005 and 2006 were 18% and 15% respectively.
Required
Determine the due dates for filling such returns and compute interest if any

Question Twelve
Tragic Motorways (‘TM’) is a company dealing with transport and logistics. For the year of income 2005,
TM filed a statement of tax payable of TShs 240 million. A month before the year end TM revised its
estimated tax payable to TShs 220 million. Up to the year-end TM had paid taxes in form of withholding
tax and installment payments amounting to TShs. 180 million.

On January 31, 2007, the CIT issued an adjusted assessment depicting a tax payable equal TShs 310 million.
The Statutory rate applicable for the whole period of failure is 18% per annum.
Required
Determine total tax liability as at January 31, 2007

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