Union Budget 2021-22 Expectations: Tax Collection at Source (TCS) is a mechanism to accumulate tax by the vendor in specified transactions from the purchaser or licensee or lessee. In the previous couple of years, the authorities has enhanced the scope of TCS provisions. Earlier Section 206C of the Income-Tax Act supplied for the TCS on the business of buying and selling in alcohol, liquor, forest produce, scrap and so forth.
The authorities’s aims are to verify tax evasion and add one other supply of tax assortment. Considering this, the Finance Act 2020 has widened the scope of TCS to embrace the assortment of tax on overseas remittance by way of Liberalised Remittance Scheme (LRS), on the promoting of abroad tour package deal and sale of items over a threshold restrict.
Here are the suggestions to rationalise the TCS provisions in the Income-Tax Act.
Relaxation from the rigour of ‘assessee-in-default’
If any individual, liable for the assortment of tax at supply, fails to accumulate the complete or any half of the tax or after assortment fails to deposit the similar to the credit score of the Central Government, then he shall be deemed to be assessee-in-default. A collector will not be deemed to be in default if the quantity is acquired from an individual who has thought of such quantity whereas computing revenue in the return and has paid the tax due on such declared revenue. The receiver may have to get hold of a certificates to this impact from a Chartered Accountant in Form No. 27BA and submit it electronically.
The object behind the deduction/ assortment of TDS/ TCS is the similar, that’s, to guarantee the advance recovery of the taxes from the involved payer/vendor to be credited to the account of the involved recipient/purchaser. Therefore, it’s endorsed to prolonged this profit below Sub-section (6A) of part 206C to the individuals lined below sub-section (1F), (1G) and (1H) of part 206C, particularly, assortment of tax from sale of the motorcar, remittance out of India below LRS, sale of abroad tour package deal and assortment exceeding Rs 50 lakh from the sale of items.
Parity in the rate of curiosity for non-deposit of TDS & TCS quantity
Section 201 gives the penalties in case of any failure to deduct or to pay the tax deducted at supply. The provision gives that deductor shall be liable to pay curiosity at the rate of 1% monthly/half of the month in case there’s a failure to deduct tax. However, the place a deduction has been made however tax has not been deposited, the curiosity is levied at the rate of 1.5% for each month or half of the month.
In distinction to above Section 206C prescribed solely a single rate of curiosity. If the collector fails to accumulate TCS or after amassing fails to deposit it with the authorities, curiosity is levied at the rate of 1% for each month or half month. It is anticipated that the authorities could carry parity in the penal provision for each the default. Section 206C might be amended to present a better rate of curiosity in case tax has been collected however not deposited to the credit score of Central authorities.
Enhance the scope to apply for decrease tax assortment certificates
An assessee can apply to the Assessing Officer to subject a certificates for assortment of tax at decrease charges below part 206C(9). Such certificates shall be issued if current and estimated tax legal responsibility of assessee justifies assortment of tax at a decrease rate. This profit is just out there to the individuals lined below sub-sections (1) and (1C) of part 206. The assessee lined below sub-section (1F) (sale of motorcar), (1G) (remittance of overseas foreign money below LRS or sale of an abroad tour package deal) and (1H) (sale of items) doesn’t have the possibility to method the assessing officer to subject decrease tax assortment certificates. It is really useful that the profit to apply for decrease assortment certificates must also be prolonged to the individuals lined below sub-sections (1F), (1G) and (1H) of part 206C.
Penalty for Failure to Furnish TCS Returns
If an individual fails to file the TCS return or doesn’t file it by the due dates, he shall be liable to pay penalty below Section 271H. The penalty below Section 271H can be levied in case of furnishing of inaccurate info below TCS return. The minimal quantity of penalty for failure to furnish TCS return or offering inaccurate info therein is Rs. 10,000 which might go up to Rs. 100,000. The penalty payable below this provision is as well as to the charges payable below Section 234E.
It is really useful that penalty for non-filing shouldn’t be levied if the TDS or TCS return is filed earlier than the expiry of the due date of submitting of return of revenue of the earlier year through which the tax was so deducted or collected, irrespective of the quarter to which the tax relates.
Further, the penalty could also be prescribed having regard to the quantum of default and the interval of delay, and no discretion could also be given to the Assessing Officer on this regard. In any case, it shouldn’t exceed the tax collectable at supply, in respect of which the quarterly assertion has not been filed.
(By CA Naveen Wadhwa, DGM, Taxmann, with CA Tarun Kumar, Consultant, Taxmann)