Rationalisation of the provisions of section 276CC

The existing provisions of section 276CC of the Act, inter alia, provide that prosecution proceedings for failure to furnish returns of income against a person shall not proceeded against, for failure to furnish the return of income in due time, if the tax payable by such person, not being a company, on the total income determined on regular assessment does not exceed three thousand rupees. The existing provisions do not provide for taking into account tax collected at source and self-assessment tax for the purposes of determining the tax liability.

Since the intent of said provision has always been to take into account pre-paid taxes, while determining the tax payable, it is proposed to amend the said section so as to make the legislative intention clear and to include the self-assessment tax, if any, paid before the expiry of the assessment year, and tax collected at source for the purpose of determining tax liability.

Further, in order to rationalise the existing threshold limit of tax payable under said section, it is further proposed to amend the said section so as to increase the threshold of tax payable from the existing rupees three thousand to rupees ten thousand.

These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year

2020-21 and subsequent assessment years.

[Clause 65]

Extract of Clause 65 of Finance Bill 2019

65. Amendment of section 276CC.

In section 276CC of the Income-tax Act, in the proviso, in clause (ii), for sub-clause (b), the 30 following sub-clause shall be substituted with effect from the 1st day of April, 2020, namely:––

“(b) the tax payable by such person, not being a company, on the total income determined on regular assessment, as reduced by the advance tax or self-assessment tax, if any, paid before the expiry of the assessment year, and any tax deducted or collected at source, does not exceed ten thousand rupees.”.

Note on Clause 65 of Finance Bill 2019

Clause 65 of the Bill seeks to amend section 276CC of the Income-tax Act relating to failure to furnish returns of income.

The proviso to the said section, inter alia, provides that a person shall not be proceeded against under the said section, for failure to furnish the return of income in due time, if the tax payable by such person, not being a company, on the total income determined on regular assessment does not exceed three thousand rupees.

It is proposed to amend sub-clause (b) of clause (ii) of the said proviso so as to provide reference of self-assessment tax, if any, paid before the expiry of the assessment year, and tax collected at source in the said proviso, and also to increase the threshold limit of tax payable from three thousand rupees to ten thousand rupees in the said proviso.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.

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