Master Circular on TDS-Need of the hour


In order to support/clarify the provisions of Chapter XVII, various circulars have been issued from time to time. Further various court decisions, favourable or unfavourable for the assessees, have also clarified various provisions of Tax deduction at source or tax collection at source. These court decisions/circulars/notifications have been more or less accepted by both the Department and the assessees.

However, the difficulty arises for the assessees since all circulars, which may have been issued way back in 1995, 1996 etc. (still applicable) are not available at one place. Even though ignorance of law is not an excuse, it is quite possible that due to non-availability of the clarifications issued so far at one place, some assessees inadvertently might not have  deducted tax on particular transactions entered into by them. Since approximately 40% of total revenue is collected through TDS /TCS, it is essential to issue a master circular every year on the lines of circular on TDS on Salaries. Issuing a master circular, clearly laying down the well established Court decisions and circulars issued so far, would on one hand improve compliance of TDS/TCS provisions and on the other hand act as easy reference for the assessees.


To improve compliance of TDS/TCS provisions it is suggested that a master circular exclusively on TDS be issued, within a period of 15 days of passing of Finance Act every year.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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June 2021