Section 276BB of the Income-tax Act currently provides for prosecution in cases where the tax collected at source (TCS) is not paid to the Central Government, with penalties including imprisonment for up to seven years. The Finance Bill 2025 proposes an amendment to this provision, stating that prosecution will not be initiated if the payment of the TCS is made before the deadline for filing the quarterly statement under Section 206C of the Act. This change aims to provide relief to those who delay payments but settle the tax before the filing period ends. The amendment will come into effect on April 1, 2025.
Budget 2025: Exemption from prosecution for delayed payment of TCS in certain cases
Section 276BB of the Act provides for prosecution in case of failure to pay the tax collected at source to the credit of Central Government. The provision of the said section states that if a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C of the Act, 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 276BB of the Act to provide that the prosecution shall not be instituted against a person covered under the said section, if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the quarterly statement under proviso to sub-section (3) of section 206C of the Act in respect of such payment.
3. This amendment will take effect from the 1st day of April, 2025.
[Clause 84]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 84 of the Bill seeks to amend section 276BB of the Income-tax Act relating to failure to pay the tax collected at source.
The provisions of the said section provides that if a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, 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. The proviso to subsection (3) of section 206C mandates that the tax collected at source has to be paid to the credit of the Central Government within the time provided by rules.
It is proposed to insert a proviso to the said section so as to provide that the provisions of that section shall not apply, if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time provided by rules for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
84. Amendment of section 276BB.
In section 276BB of the Income-tax Act, the following proviso shall be inserted, namely:––
“Provided that the provisions of this section shall not apply if the payment of the tax collected at source has been made to the credit of the Central Government at any time on or before the time prescribed for filing the statement under the proviso to sub-section (3) of section 206C in respect of such payment.”.
