Relief from special provision for higher rate of TDS/TCS for non-filers of income-tax returns – Budget 2023
Section 206AB of the Act provides for special provision for higher TDS for non-filers of income-tax returns. Similarly, section 206CCA of the Act provides for special provision for higher TCS for non-filers of income-tax returns. These non-filers in these sections are referred to as “specified person”.
2. These sections define “specified person” to mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted or collected (as the case may be)-
(i) for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired; and
(ii) the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in the said previous year.
3. The provisos to these definitions exclude a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India.
4. There may be certain persons who are not required to furnish the return of income. It is not the intention to include such persons in the category of non-filers. Hence, in order to provide relief in such cases, it is proposed to amend the definition of the “specified person” in sections 206AB and 206CCA of the Act so as to exclude a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and who is notified by the Central Government in the Official Gazette in this behalf.
This amendment will take effect from 1st April, 2023.
[clauses 89 & 91]
Extract of relevant clause of Finance Bill 2023
Clause 89 of the Bill seeks to amend section 206AB of the Income-tax Act relating to special provision for deduction of tax at source for non-filers of income-tax return.
Sub-section (3) of the said section defines “specified person” for the purpose of this section to mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted. The proviso to the said sub-section excludes a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India.
It is proposed to amend the said proviso to also exclude a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.
This amendment will take effect from 1st April, 2023.
Clause 91 of the Bill seeks to amend section 206CCA of the Income-tax Act relating to special provision for collection of tax at source for non-filers of income-tax return.
Sub-section (3) of the said section defines “specified person” to mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be collected. The proviso to said sub-section excludes a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India.
It is proposed to amend the said proviso to exclude a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.
This amendment will take effect from the 1st April, 2023.
Extract of Relevant Amendment Proposed by Finance Bill, 2023
89. Amendment of section 206AB.
In section 206AB of the Income-tax Act, in sub-section (3), for the proviso, the following proviso shall be substituted, namely:–
“Provided that the specified person shall not include–
(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.”.
91. Amendment of section 206CCA.
In section 206CCA of the Income-tax Act, in sub-section (3), for the proviso, the following proviso shall be substituted, namely:–
“Provided that the specified person shall not include–
(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.”.
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