The Union Budget 2024 has introduced several tax simplification measures aimed at easing the compliance burden on taxpayers. A significant proposal is the decriminalisation of delays in filing Tax Collected at Source (TCS), aligning it with similar provisions for Tax Deducted at Source (TDS). This story explores these proposed changes and their implications.
Decriminalisation of TCS Delays
Ravi Agarwal, Chairman of the Central Board of Direct Taxes, announced that the Finance Bill might include amendments to decriminalise delays in filing TCS. Under current laws, any delay in filing TCS is treated as a criminal offence. The proposed relief aims to offer the same leniency recently extended to TDS.
“For TCS also, we may do that (decriminalisation for delayed payment). We will take care of that and may make appropriate amendments in the Finance Bill. We will make a decision soon,” Agarwal told Moneycontrol.
TDS and TCS: An Overview
TDS and TCS are crucial components of the Indian tax system. TDS is the tax deducted by a company on payments made to an individual when the amount exceeds a specified threshold. It applies to various payments such as salaries, professional fees, brokerage, and commissions. On the other hand, TCS is the tax collected by sellers during transactions with buyers, pertaining to the sale of goods.
The Union Budget has introduced provisions allowing payments to be made up to the filing of the TDS return for the respective quarter, reducing the compliance burden on taxpayers. Industry stakeholders have called for similar decriminalisation measures for TCS.
Legal Implications and Compliance Relief
Section 276B of the Income Tax Act stipulates that failure to deposit tax withheld by an individual can lead to rigorous imprisonment for a term ranging from three months to seven years, along with a fine. However, the Budget 2024 offers a significant relaxation: if the deducted amount is deposited before filing the quarterly TDS returns, the stringent provisions of this section will not apply.
Om Rajpurohit, Director at Moore-Singhi, highlighted this relief and suggested that a parallel amendment could be made for TCS. Currently, non-payment of TCS within the due date is considered a criminal offence. Implementing a similar relaxation for TCS would greatly reduce the compliance burden and legal risks for taxpayers.
Conclusion
The proposed decriminalisation of TCS delays in the Union Budget 2024 represents a significant step towards tax simplification and easing compliance burdens. By aligning TCS provisions with those of TDS, the government aims to create a more taxpayer-friendly environment. These changes, if implemented, will provide much-needed relief to taxpayers and foster a more compliant and less punitive tax system.
