'Punish those who fail to collect tax at source'
The Budget has proposed imposition of severe penalty for failure to collect tax at source and false quoting of TAN.india Updated: Feb 28, 2006 16:53 IST
The Union Budget for 2006-07 has proposed imposition of severe penalty for failure to collect tax at source and false quoting of TAN.
No penalty was so far specified under the Income-Tax Act for failure to collect tax at source. A new section 271CA has now been introduced in the Act so as to provide for imposition of penalty on any person concerned who has failed to collect tax at source.
"Such penalty is proposed to be a sum equal to the amount of tax which he failed to collect at source," the Memorandum Explaining the Provisions in Finance Bill, 2006 said.
No penalty shall be imposed if the person concerned proved there was a reason for his failure to collect tax at source.
The order of penalty is proposed to be made an appeallable order.
This amendment would take effect from April 1, 2007 and will, accordingly, apply to the assessment year 2007-08 and in subsequent years.
The Budget also says like in same of quoting of false Permanent Account Number (PAN), false quoting of `tax deduction and collection account number' would result in tax deducted or collected being posted to suspense account and not to the account of the deductee or collectee.
Under the existing provision, a person becomes liable for a penalty of Rs 10,000 if he fails to apply to the Assessing Officer for the allotment of a `tax deduction and collection account number', which is to be quoted in all challans, certificates, returns and other documents.
Under the existing provisions, no penalty was specified for quoting a false `tax deduction and collection account number' even though a penalty was already specified for quoting or intimating a false PAN.