Prosecution norms eased for TDS, ITR filing defaults

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Highlights

  • CBDT’s circular, issued on September 9, sets the limit and time period for proceeding with prosecution in respect of TDS defaults
  • It states: Cases where non-payment of TDS is Rs 25 lakh or below and delay in deposit is less than 60 days from the due date shall not be processed for prosecution in normal circumstances

MUMBAI: The Central Board of Direct Taxes (CBDT) has relaxed some norms relating to the prosecution of income tax defaulters for the delay in depositing TDS (tax deducted at source), under-reporting of income in the tax return or non-filing of I-T return. 

CBDT’s circular, issued on September 9, sets the limit and time period for proceeding with the prosecution in respect of TDS defaults. It states: Cases where non-payment of TDS is Rs 25 lakh or below and delay in deposit is less than 60 days from the due date shall not be processed for prosecution in normal circumstances. However, irrespective of this, recourse will continue to lie against habitual defaulters, with the approval of a “collegium” comprising of two senior-ranking officers. 

Finance minister Nirmala Sitharaman had tweeted last month: “I have instructed the revenue secretary to come up with measures to ensure that honest taxpayers are not harassed and those who commit minor or procedural violations are not subjected to disproportionate or excessive action.” 

It may be recalled that Bollywood producer Firoz Nadiadwala had hit the headlines in May when Mumbai’s magistrate court sentenced him to rigorous imprisonment of three months for the delay in depositing TDS of Rs 8.56 lakh. This was because Section 276B provides for prosecution for a period between three months and seven years, irrespective of the period of delay or the quantum of TDS not deposited in time. Across India, several such sentences have been issued by magistrate courts. 

Ameet Patel, chairperson of the taxation committee at Bombay Chartered Accountants’ Society, says: “While CBDT’s circular dated May 28, 1980, had instructed I-T officials not to launch prosecution in cases where the delay in depositing TDS is less than one year, this instruction was withdrawn in August 2013. Now, a leeway of two months has been provided and it is a step in the right direction. Above all setting a threshold of above Rs 25 lakh for initiating prosecution proceedings will help several taxpayers, especially small-medium entrepreneurs.” 

Courtesy: Economic Times