Relaxing the requirement of obtaining TAN for certain deductors

[Admin TMI]

Question - What are the proposed amendments in section 203A in Finance Bill 2015 ?

[Admin TMI]

Relaxing the requirement of obtaining TAN for certain deductors

Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department. However, currently, for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act, the deductor is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number (PAN).

The obtaining of TAN creates a compliance burden for those individuals or Hindu Undivided Family (HUF) who are not liable for audit under section 44AB of the Act. The quoting of TAN for reporting of Tax Deducted at Source (TDS) is a procedural matter and the same result can also be achieved in certain cases by mandating quoting of PAN especially for the transactions which are likely to be one time transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act. To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.

This amendment will take effect from 1st June, 2015.

AI Summary

TAN requirement relaxed: notified deductors may quote PAN instead for certain TDS reporting, reducing compliance burden. The amendment provides that the requirement to obtain and quote Tax Deduction and Collection Account Number (TAN) will not apply to notified deductors or collectors, who may instead report tax deducted or collected by quoting their Permanent Account Number (PAN); this relief is aimed at reducing compliance burdens for individuals and HUFs not liable to audit and for one time or infrequent transactions such as immovable property transfers and certain payments to non residents.