Centre mulls decriminalizing delayed TCS filing: How it impacts you
What's the story
The Central Board of Direct Taxes (CBDT) is considering a proposal to decriminalize late filing of Tax Collected at Source (TCS), according to its Chairman Ravi Agarwal. This potential change could be included in the upcoming Finance Bill. Currently, any delay in TCS filing is treated as a criminal offense under Indian law. The proposed amendment aims to align the treatment of TCS with recent changes made for Tax Deducted at Source (TDS) in the Union Budget 2024.
Decriminalization pledge
CBDT Chairman promises action on TCS decriminalization
During an interview with Moneycontrol, Agarwal stated, "For TCS also, we may do that (decriminalization for delayed payment)." "We will take care of that and may make appropriate amendments in the Finance Bill. We will make a decision soon." This statement indicates the government's commitment to easing tax compliance burdens on taxpayers. The Union Budget has already made some changes, allowing payments to be made up until the filing of the TDS return for each quarter.
Industry backing
Industry supports decriminalization of delayed TCS filing
The industry has voiced its support for extending the decriminalization clause to TCS, similar to the provisions made for TDS. This move is seen as a step toward reducing compliance burdens on taxpayers. It's important to note that while TDS applies to payments like salaries and professional fees, TCS is collected by sellers during transactions with buyers and pertains specifically to the sale of goods.
Legal penalties
Current law imposes severe penalties for non-compliance
Under Section 276B of the Income Tax Act, failure to deposit tax withheld by an individual can lead to rigorous imprisonment ranging from three months to seven years, along with a fine. This highlights the severity of penalties currently in place for non-compliance with TCS filing deadlines. The proposed changes aim to alleviate these harsh consequences and make the process more taxpayer-friendly.