Budget 2024 proposes an amendment to Section 206C of the Income-tax Act, addressing concerns from entities with tax-exempt income facing difficulties with tax collected at source (TCS) on their transactions. The new amendment, effective from October 1, 2024, will enable the Central Government to notify specific persons, institutions, or classes of entities for whom TCS may be either exempted or applied at a reduced rate. This provision aims to alleviate the tax burden on organizations that are not required to file income tax returns due to their exempt status, thereby simplifying compliance and reducing undue financial strain.
Budget 2024: Extending the scope for lower deduction / collection certificate of tax at source
Section 206C of the Act provides for the collection of tax at source on business of trading in alcoholic liquor, forest produce, scrap etc.
2. Representations have been received that there can be entities whose income is exempt from taxation and are not required to furnish returns of income. However, they face difficulty as tax is being collected on transactions carried out by them. They state that there is no provision in the Act for them to be exempted from the TCS provisions.
3. It is therefore proposed to provide that no collection of tax shall be made or that collection of tax shall be made at such lower rate in respect of specified transaction, from such person or class of persons, including institution, association or body or class of institutions, associations or bodies, as may be notified by the Central Government in the Official Gazette, in this behalf.
4. The amendment will take effect from 1st day of October 2024.
[Clause 70]
Extract of Clause 70 of Finance Bill 2024
Clause 70 of the Bill seeks to amend section 206C of the Income-tax Act relating to profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.
It is proposed to insert a new sub-section (12) in the said section so as to provide that no collection of tax shall be made or collection of tax shall be made at such lower rate in respect of specified transaction, from such person or class of persons, including institution, association or body or class of institutions, associations or bodies, as the Central Government may, by notification in the Official Gazette specify in this behalf.
These amendments will take effect from 1st October, 2024.
70. Amendment of section 206C.
In section 206C of the Income-tax Act, –
(ii) after sub-section (11), the following sub-section shall be inserted, namely:–
“(12) Notwithstanding anything contained in this section, no collection of tax shall be made or collection of tax shall be made at such lower rate in respect of specified transaction, from such person or class of persons, including institution, association or body or class of institutions, associations or bodies, as the Central Government may, by notification in the Official Gazette specify in this behalf.”.
