SECTION 201 – CONSEQUENCE OF FAILURE TO DEDUCT OR PAY
Non-initiation of penalty and prosecution proceedings in certain cases of defaulters under Chapter XVII-B
It has come to the notice of the Board that some employers are not correctly evaluating the perquisites, allowances or other profits in lieu of or in addition to any salary of wages (referred to as “salaries” hereinafter) paid to their employees for the purpose of deducting tax at source under section 192 of the Income-tax Act, 1961. Such defaulters are liable to penalty proceedings under sections 221 and 271C of the Act, and also liable to prosecution under Chapter XXII of the Act.
2. However, before taking stringent measures, the Board has decided to grant an opportunity to such defaulters. Even now if they pay the proper tax on “salaries” as envisaged under section 192 along with interest liability under section 201(1A) of the Act no penalty proceedings under section 221 or prosecution under Chapter XXII of the Act shall be initiated provided such payment is made on or before February 28, 1995.
3. This circular shall also cover such cases which were earlier covered by Circular No. 685, dated 17th June, 1994, where the facility was extended in respect of salaries and allowances paid abroad or perquisites provided abroad to the employee for services rendered in India. The time limit of 31st July, 1994, was fixed by Circular No. 685 (which was later extended to 31st August, 1994) is now extended to 28th February, 1995.
4. The contents of this circular may be brought to the notice of all the assessees especially those responsible for deducting tax under section 192, so that they can avail of this opportunity. It may be emphasised that the Department will intitate coercive steps to recover the due tax, which was not deducted at source and/or not paid to the Government before 28th February, 1995.
5. The circular will apply in respect of the assessment years beginning from 1989-90 till the assessment year 1994-95.
