VIA Tax Forum organised a Session on Recent Changes in TDS provisions has organised a session on recent changes in TDS & TCS provisions which included the recently introduced provision with regards to TDS on purchase and higher rate of TDS & TCS for non –filers of income tax returns. The speaker for the programme was CA Adv. Abhay Agrawal, renowned Chartered Accountant & Advocate practising in litigation and appellate area. The provision covered the applicability of new TDS provisions on purchase of goods above Rs. 50 Lakh and its interplay with already existing provision of TCS U/s 206C(1H).
CA Naresh Jakhotia welcomed the speaker and participants. He also gave an overview of the recent changes introduced. He appealed that the Government must ensure that any new proposal on direct and indirect tax must pass the test of “Ease of Business”. He very strongly emphasized that new provisions would neither enhance that revenue collection nor widen the tax base which was the primary intention of introducing TDS on purchase of goods. The new provision would increase the unintended compliances burden on the taxpayers, he remarked
CA Abhay Agrawal in a simple and lucid language explained the new amendment with examples and live illustration. He started his session explaining the provisions 206(1H) and 194Q introduced by Finance Act 2020 and their overlapping effect. He summarized differences between provision of Sec 194Q Sec 206H. In case of simultaneous existence of both the sections, the provision of section 194Q will prevail over Sec 206(1H), he explained. He elaborated about the mode of reckoning the limit of Rs. 10 Cr and Rs. 50 Lakh for making compliance with the new TDS provision. He also discussed the applicability in case of persons engaged in Coal, scrap, Car, Liquor business wherein the purchaser is already covered by existing TCS provision. He also covered various compliances which the taxpayers would be required to do after doing TDS & TCS. The TDS liability would arise even on advance payment if it is done prior to purchase, he cautioned.
He also highlighted the severe effect of non-compliance with new TDS provision which will be disallowance to the extent of 30% of purchase which impose huge tax liability on the taxpayers. As far as the new provision for non-filers of income tax returns is concerned, Agrawal explained that even if a deductee has a PAN but has not filed ITR for last two preceding years and time limit for filing of ITR for two preceding years had expired then TDS/TCS rate would be minimum 5% or twice the applicable rate. This is a very important checkpoint that has been introduced to cover assesses who have TDS credit but ignore to file their ITR thus avoiding payment of correct tax to the government, he opined.
CBDT has come up with a database where the deductor can check if the deductee has filed ITR for the specified period and thus deducting TDS at the correct rate. Similar provision has been brought in in case of a seller who has to TCS Sec 206 CCA, if the collectee does not have a PAN now or doesn’t file the ITR even after TCS credit Of Rs. 50,000/- in their tax account. He also explained about the new utility provided by the income tax department so as to verify whether the person is a nonfilter of income tax returns or not. He concluded with a remark that the Government should rationally think of what they really want to achieve out of these additional compliances on the trade and industries.
CA Sachin Jajodiya conducted the Q & A session and gave a concluding remarks with a formal vote of thanks. The session was attended by CA Mahendra Jain, Vaibhav Agrawal, CA Sagar Shah.