Amendment of section 201.
49. In section 201 of the Income-tax Act, with effect from the 1st day of September, 2019,––
(a) in sub-section (1), in the first proviso, for the word “resident” wherever it occurs, the word “payee” shall be substituted;
(b) in sub-section (1A), in the proviso, for the word “resident” wherever it occurs, the word “payee” shall be substituted;
(c) in sub-section (3), after the words “credit is given”, the words, brackets and figures “or two years from the end of the financial year in which the correction statement is delivered under the proviso to sub-section (3) of section 200, whichever is later” shall be inserted.
Notes on Clauses:
Clause 49 of the Bill seeks to amend section 201 of the Income tax relating to consequences of failure to deduct or pay.
The first proviso to sub-section (1) of the said section provides that any person, including the principal officer of a company specified therein, who fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVIIB on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished a return of his income, has taken into account such sum for computing income in such return of income, has paid the tax due on the income declared by him in such return of income and furnishes a certificate to this effect from an accountant in the prescribed form.
It is proposed to amend the said first proviso so as to substitute the word “resident” with the words “payee”.
It is further proposed to make a similar amendment in the proviso to sub-section (1A) of the said section.
Sub-section (3) of the said section provides that no order deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a payment made to a resident shall be made after the expiry of seven years from the end of the financial year in which payment is made or credit is given.
It is proposed to amend the said sub-section to specify that in respect of a correction statement delivered by the assessee under the proviso to sub-section (3) of section 200, no order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a resident, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given, or two years from the end of the financial year in which such correction statement is delivered under the proviso to sub-section (3) of section 200, whichever is later.
These amendments will take effect from 1st September, 2019.
