Business Bureau :
The Tax Forum of Vidarbha Industries Association (VIA) recently conducted 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 and TCS for non –filers of Income Tax Returns. Renowned CA Adv. Abhay Agrawal practicing in litigation and appellate area, was the keynote speaker. 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). At the outset, CA Naresh Jakhotia welcomed the speaker and participants. He also gave an overview of the recent changes introduced. He said that the Government must ensure that any new proposal on direct and indirect tax must pass the test of “Ease of Business”. He emphasized that the 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 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 also spoke about the mode of reckoning the limit of Rs 10 crore 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 and TCS.
The TDS liability would arise even on advance payment if it is done prior to purchase, he cautioned. He further 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. 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.