The proposed amendments in Budget 2024 to Section 276B of the Income Tax Act aim to rationalize provisions related to prosecution for failure to pay tax to the credit of the Central Government. Currently, Section 276B stipulates rigorous imprisonment ranging from three months to seven years and a fine for failure to pay tax deducted at source. The amendment introduces an exemption from prosecution for individuals who remit the tax deducted for a quarter to the government’s credit by the deadline for filing the quarterly statement under Section 200(3). This change, effective from October 1, 2024, provides relief to taxpayers by ensuring that timely payment within the prescribed period will not attract prosecution.
Budget 2024: Amendments proposed in section 276B of the Act for rationalisation of provisions
Section 276B of the Act provides for prosecution in case of failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. The provisions of the said section state that, inter-alia, if a person fails to pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
2. It is proposed to amend section 276B of the Act to provide for exemption from prosecution to a person covered under clause (a) of the said section, if the payment of tax deducted in respect of a quarter has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement of such quarter under sub-section (3) of section 200 of the Act.
3. This amendment will take effect from the 1st day of October, 2024.
[Clause 84]
Extract of Clause 84 of Finance Bill 2024
Clause 84 of the Bill seeks to amend section 276B of the Income-tax Act, relating to failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
The said section, inter alia, provides that if a person fails to pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
It is proposed to insert a proviso to the said section so as to provide that the provisions of this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under sub-section (3) of section 200.
This amendment will take effect from 1st October, 2024.
84. Amendment of section 276B.
In section 276B of the Income-tax Act, the following proviso shall be inserted with effect from the 1st day of October, 2024, namely:––
“Provided that the provisions of this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement for such payment under sub-section (3) of section 200.”.
Extract of Section 276B post Proposed Budget 2024 Amendment
Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.
276B. If a person fails to—
(a) pay to the credit of the Central Government, the tax deducted] at source by him as required by or under the provisions of Chapter XVII-B; or
(b) “pay tax or ensure payment of tax to the credit of the Central Government, as required by or under––
(i) sub-section (2) of section 115-O;
(ii) the proviso to section 194B;
(iii) the first proviso to sub-section (1) of section 194R;
(iv) the proviso to sub-section (1) of section 194S; or
(v) sub-section (2) of section 194BA,
he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
Provided that the provisions of this section shall not apply if the payment referred to in clause (a) has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement for such payment under sub-section (3) of section 200.
