Section 206C(7A) of the Income Tax Act sets a time limit for passing an order deeming a person in default for failing to collect tax under Section 206C(6A). Currently, such orders must be issued within six years from the financial year in which tax was collectible or two years from the financial year in which a correction statement is filed under Section 206C(3B), whichever is later. The Finance Bill 2025 proposes an amendment to exclude periods during which proceedings were stayed by a court or similar authority while calculating this time limit. This change, effective from April 1, 2025, ensures that the time limit is not affected by legal delays.
FAQs – Budget 2025: Excluding the period such as court stay etc. for calculating time limit to pass an order against assessee in default for failure to collect tax
Q.1 What is section 206C(7A) of the Act?
Ans. This section provides time limit to pass an order u/s 206C(6A) deeming a person to be an assessee in default for failure to collect tax.
Q.2 What is the time limit provided u/s 206C(7A) of the Act?
Ans. No order u/s 206C(6A) of the Act can be passed after expiry of
i. six years from the end of the financial year in which tax was collectible; or
ii. two years from the end of the financial year in which correction statement is delivered u/s 206C(3B), whichever is later.
Q.3 What changes are proposed in the Finance Bill, 2025 in the section 206(7A)?
Ans. While computing the time limit u/s 206C(7A) of the Act, it is proposed to exclude time period for which proceedings were stayed by an order of any court, etc.
Q.4 From when these changes will take place?
Ans. These changes will be effective from 01.04.2025.
