CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 201.
42. In section 201 of the Income-tax Act, for sub-section (1A), the following sub-section shall be substituted with effect from the 1st day of July, 2010, namely:—
"(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,—
(i) at one per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200.".
Notes on Clauses:
Clause 42 of the Bill seeks to amend section 201 of the Income tax Act relating to consequences of failure to deduct or pay tax.
Under the existing provisions contained in sub-section (1A) of the aforesaid section, the person, principal officer and the company referred to in sub-section (1) of the aforesaid section, in case of failure of deduction or payment of tax, are liable to pay simple interest at one per cent. for every month or part of a month on the
amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200.
It is proposed to amend sub-section (1A) of the aforesaid section so as to increase the interest chargeable under that sub-section from one per cent. to one and one-half per cent. for every month or part of a month for tax deducted but not paid.
This amendment will take effect from 1st July, 2010.
