Government may decriminalise delay in TCS filing in Finance Bill, says CBDT chairman

TCS is the tax collected by sellers during transactions with buyers,

The Union Budget has proposed a number of tax simplification measures, and the Finance Bill is likely to include decriminalisation of delay in filing of Tax Collected at Source (TCS), according to Ravi Agarwal, Chairman, Central Board of Direct Taxes.

Any delay in filing TCS falls under the purview of a criminal offence.

However, the proposed relief is being considered on the similar lines as announced for Tax Deducted at Source (TDS) in the Union Budget.

“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.

The Union Budget has made provisions allowing payments to be made up to the filing of the TDS return for the respective quarter in a bid to reduce compliance burden on taxpayers.

Similarly, the industry has sought the decriminalisation clause to be extended to TCS as well.

TDS is the tax deducted by a company on payments made to an individual when the amount surpasses a specified threshold. TCS is the tax collected by sellers during transactions with buyers.

TDS applies to payments like salaries, professional fees, brokerage, and commissions, while TCS pertains to the sale of goods.

Earlier, the government made changes to the Finance Bill before it was passed in Parliament.

Section 276B of the Income Tax Act stipulates that failure to deposit tax withheld by an individual may result in a rigorous imprisonment for a minimum term of three months and a maximum term of seven years along with a fine.

“Budget 2024 has granted a significant relaxation with a caveat if the amount so deducted is deposited before filing of quarterly TDS returns i.e. July 31, October 31, January 31, and May 31 for respective quarters ending in June, September, December and March, then the provisions of this section shall not apply. Notably, the due date of deposit of TDS is 7th of next month with March month exception where the due date of April 30,” Om Rajpurohit, Director, Moore-Singhi, a tax advisory firm, told Moneycontrol.

A parallel relief can also be incorporated for TCS deposits as well where non-payment within the due date is considered a criminal offence, he added.