Provisions relating to tax deduction at source (TDS) and tax collection at source (TCS)
RATIONALISATION OF PROVISIONS RELATING TO TAX DEDUCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS)
Insertion New Section 206CB for processing of TCS Returns
The existing provisions contained in the Income Tax Act provide the method of processing of statements of TDS. Since there was no procedure specified with respect to processing of TCS, it is proposed to insert a new section 206CB relating to processing of statements of TCS and the said section provide that statement of TCS or a correction statement made under section 206C shall be processed in the manner specified therein. Consequently, it is proposed through amendment in Sec. 156 that where any sum is determined to be payable by the assessee or the deductor or the collector under sub-section (1) of section 143 or sub-section (1) of section 200A or sub-section (1) of section 206CB, the intimation under those sub-sections shall be deemed to be a notice of demand for the purposes of this section.
Furnishing of Information under section 195(6)
It is proposed to amend the provisions of section 195 of the Act to provide that the person responsible for paying any sum, whether chargeable to tax or not, to a non-resident, not being a company or foreign company, shall be required to furnish the information of the prescribed sum in such form and manner as may be prescribed. It is further proposed to insert a new provision in the Act to provide that in case of non-furnishing of information or furnishing of incorrect information under sub-section (6) of section 195(6) of the Act, a penalty of one lakh rupees shall be levied. It is also proposed to amend the provisions of section 273B of the Act to provide that no penalty shall be imposable under this new provision if it is proved that there was reasonable cause for non – furnishing or incorrect furnishing of information under sub-section (6) of section 195 of the Act. This amendment will take effect from 1st June, 2015.
TDS statement processing procedure defined; Fee u/s 234E may be demanded through intimation
The existing provision of Sec.200A does not provide mechanism for determination of late fee under Sec. 234E at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of Section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act.
TDS on Salaries
It is proposed to amend the provisions of section 192 of the Act to provide that the person responsible for paying, for the purposes of estimating income of the assessee or computing tax deductible under section 192(1) of the Act, shall obtain from the assessee evidence or proof or particulars of the prescribed claim (including claim for set-off of loss) under the provisions of the Act in the prescribed form and manner.
CLARIFICATION REGARDING DEDUCTION OF TAX FROM PAYMENTS MADE TO TRANSPORTERS [SECTION 194C]
It is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section 44AE of the Act (i.e a person who is not owning more than 10 goods carriage at any time during the previous year) and who has also furnished a declaration to this effect along with his PAN. This amendment will take effect from 1st June, 2015.
RATIONALISATION OF PROVISIONS RELATING TO DEDUCTION OF TAX ON INTEREST (OTHER THAN INTEREST ON SECURITIES) [SECTION 194A]
(a) Payment of Interest by Co-operative bank to its members: it is proposed to amend the provisions of the section 194A of the Act to expressly provide that the exemption provided from deduction of tax from payment of interest to members by a co-operative society under section 194A(3)(v) of the Act shall not apply to the payment of interest on time deposits by the co-operative banks to its members. This amendment will take effect from 1st June, 2015.
(b) Definition of time Deposit amended: It is proposed to amend the definition of ‘time deposits’ so as to include recurring deposits within its scope for the purposes of deduction of tax under section 194A of the Act. However, the existing threshold limit of Rs 10,000 for non-deduction of tax shall also be applicable in case of interest payment on recurring deposits to safeguard interests of small depositors. ‘This amendment will take effect from 1st June, 2015.
(c) Interest payment by Banks working on core banking solutions: It is proposed to amend the provisions of section 194A of the Act to provide that the computation of interest income for the purposes of deduction of tax under section 194A of the Act should be made with reference to the income credited or paid by the banking company or the co-operative bank or the public company (i.e all branches) which has adopted core banking solutions. This amendment will take effect from 1st June, 2015.
(d) Motor Accident Claim Tribunal compensation: It is proposed to amend the provisions of section 194A of the Income-tax Act, 1961 to provide that deduction of tax under section 194A of the Act from interest payment on the compensation amount awarded by the Motor Accident Claim Tribunal compensation shall be made only at the time of payment, if the amount of such payment or aggregate amount of such payments during a financial year exceeds Rs.50,000/-. This amendment will take effect from 1st June, 2015.
Relaxing the requirement of obtaining TAN for certain deductors
Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department. However, currently, for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act, the deductor is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number (PAN).
The obtaining of TAN creates a compliance burden for those individuals or Hindu Undivided Family (HUF) who are not liable for audit under section 44AB of the Act. The quoting of TAN for reporting of Tax Deducted at Source (TDS) is a procedural matter and the same result can also be achieved in certain cases by mandating quoting of PAN especially for the transactions which are likely to be one time transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act.
To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.