In Budget 2024, significant amendments are proposed to the Income Tax Act concerning TDS and TCS correction statements. Currently, there is no limit on filing correction statements, leading to potential misuse. To address this, new amendments will enforce a six-year deadline for submitting correction statements. Specifically, Section 200 and Section 206C will be revised to stipulate that no correction statement can be delivered after six years from the end of the financial year in which the original statement was filed. This change aims to ensure a more definitive and manageable process for tax deductors and collectors, curbing the misuse of indefinite corrections. These provisions will take effect from April 1, 2025, providing a clearer timeline and reducing administrative burdens for both authorities and taxpayers.
Budget 2024: Time limit to file correction statement in respect of TDS/ TCS statements
Section 200 of the Act lists the duty of the person deducting tax under the provisions of Chapter XVII-B. Sub-section (3) of this section requires that a deductor after paying the tax deducted to the credit of the Central Government, shall prepare statements detailing the TDS deducted and furnish it within the prescribed time to the prescribed authority. The proviso to section 200 states that a person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.
2. Section 206C of the Act provides for the collection of tax at source (TCS) on business of trading in alcoholic liquor, forest produce, scrap etc. Proviso to subsection (3) of section 206C of the Act requires that a person collecting tax after paying the tax collected to the credit of the Central Government, furnish statements detailing the TCS collected within the prescribed time. Sub-section (3B) of the said section requires that the person collecting tax may also deliver to the prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under the proviso to subsection (3) in such form and verified in such manner, as may be specified by the authority.
3. While there is a time limit for furnishing statements detailing the TDS/TCS, however, there is no time limit for furnishing correction statements. Hence such statements may be revised multiple times indefinitely and thus these provisions may be misused causing difficulty to deductees / collectees. Accordingly, in order to put certainty and finality on the filing process of TDS and TCS statements, it is proposed to amend section 200 and sub-section (3B) of section 206C to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) of section 200 and statement referred to in the proviso to sub-section (3) of section 206C are respectively delivered.
4. The amendments will take effect from the 1st day of April, 2025.
[Clauses 67 & 70]
Extract of Clause 67 of Finance Bill 2024
Clause 67 of the Bill seeks to amend section 200 of the Income-tax Act relating to duty of person deducting tax.
Sub-section (3) of the said section requires that a deductor, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statement for such period and furnish it within such period, as may be provided by rules, to the prescribed authority.
The proviso to said sub-section states that a person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.
It is proposed to amend the said section to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) is required to be delivered.
This amendment will take effect from 1st April, 2025.
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.
Sub-section (3B) of the said section requires that the person collecting tax may also deliver to the prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under the proviso to sub-section (3) in such form and verified in such manner, as may be specified by the authority.
It is further proposed to amend the said sub-section (3B) to provide that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in the proviso to sub-section (3) is required to be delivered.
This amendment will take effect from 1st April, 2025.
Amendment section 200.
In section 200 of the Income-tax Act, in sub-section (3), after the proviso, the following proviso shall be inserted with effect from the 1st day of April, 2025, namely:–
“Provided further that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in subsection (3) is required to be delivered.”.
Amendment of section 206C.
In section 206C of the Income-tax Act, –
(b) in sub-section (3B), the following proviso shall be inserted with effect from the 1st day of April, 2025, namely:–
“Provided that no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in the proviso to sub-section (3) is required to be delivered.”;
