The Central Board of Direct Taxes ( CBDT ) has issued the Income Tax (Ninth Amendment) Rules, 2024, effective from October 16, 2024. The notification brings key amendments to the Income Tax Rules, 1962, particularly concerning tax collected at source ( TCS ) provisions under Section 206C of the Income Tax Act, 1961.
One of the significant changes introduced through the amendment pertains to Rule 31AA and the reporting requirements for TCS. Under the updated rules, clause (viii) has been added to Rule 31AA(4), which mandates the reporting of amounts received or debited on which tax was either not collected or was collected at a reduced rate due to a notification issued under Section 206C(12).
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Additionally, Rule 37-I has been amended to include a new sub-rule (1A), providing clarity on situations where the income of a taxpayer (referred to as the “collectee”) is assessable in the hands of another person.
The new sub-rule clarifies that in such cases, credit for TCS should be given to the person responsible for the income, not the original collectee. To facilitate this, the collectee must file a declaration with the collector, containing details such as the name, address, and PAN of the person receiving the TCS credit, as well as the reason for the reassignment. This declaration process ensures proper allocation of TCS credits to the correct individuals or entities.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
Moreover, the TCS certificate issued by the collector, as required under Section 206C(3), will now be issued in the name of the person to whom the credit is assigned. The amendment also requires the collector to maintain a safe custody of the declaration made by the collectee, thereby adding an additional layer of accountability in the collection and reporting process.
Form 27EQ, which is used for filing TCS returns, has also been revised to align with the new rules. A new Note 8A has been introduced in the verification section of the form, which requires tax collectors to write “J” if no TCS or a lower rate of TCS was applied due to a notification under Section 206C(12). This amendment enhances the accuracy of TCS reporting, ensuring that cases of lower or no tax collection due to specific exemptions are properly documented.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
The new rules come into effect immediately, as notified in the official Gazette of India. Tax professionals and businesses engaged in TCS transactions are advised to update their compliance practices in line with these changes to avoid any potential penalties or issues during tax assessments.
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