Obtaining and quoting of TAN not to apply to notified deductors or collectors

Budget 2015-16 Relaxing the requirement of obtaining TAN for certain deductors

Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department. However, currently, for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act, the deductor is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number (PAN).

The obtaining of TAN creates a compliance burden for those individuals or Hindu Undivided Family (HUF) who are not liable for audit under section 44AB of the Act. The quoting of TAN for reporting of Tax Deducted at Source (TDS) is a procedural matter and the same result can also be achieved in certain cases by mandating quoting of PAN especially for the transactions which are likely to be one time transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act. To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.

This amendment will take effect from 1^st June, 2015.

NOTE ON RELEVANT CLAUSES  OF FINANCE BILL 2015

Clause 52 of the Bill seeks to amend section 203A of the Income-tax Act relating to tax deduction and collection account number.

Under the existing provisions contained in sub-section (1) of the aforesaid section, every person deducting or collecting tax in accordance with Chapter XVII, who has not been allotted a “tax deduction account number” or, as the case may be, a “tax collection account number”, is required to apply for “tax deduction and collection account number”. Sub-section (2) of the said section provides that a person, to whom “tax deduction account number” or, as the case may be, “tax collection account number” or “tax deduction and collection account number” is allotted, is required to quote such number in the challans, certificates, statements, returns or documents as specified in clauses (a) to 15(d) of the said sub-section.

It is proposed to insert sub-section (3) in the said section so as to provide that the provisions of the said section shall not apply to a person notified by the Central Government in this behalf.

This amendment will take effect from 1st June, 2015.

EXTRACT OF RELEVANT CLAUSES FROM FINANCE BILL 2015

52. Amendment of section 203A.

In section 203A of the Income-tax Act, after sub-section (2), the following sub-section shall be inserted with effect from the 1st day of June, 2015, namely:—

“(3) The provisions of this section shall not apply to such person, as may be notified by the Central Government in this behalf.”

( Compiled by Taxguru Team)