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

Amendment to Section 203A: Tax Deductors May Use PAN Instead of TAN for Easier Compliance on One-Time Transactions. The discussion addresses proposed amendments in section 203A of the Finance Bill 2015, which aim to relax the requirement for certain tax deductors to obtain a Tax Deduction and Collection Account Number (TAN). Currently, individuals or Hindu Undivided Families (HUFs) not liable for audit under section 44AB face a compliance burden due to the TAN requirement. The amendment suggests allowing such deductors to use their Permanent Account Number (PAN) instead, especially for one-time transactions like acquiring immovable property from non-residents. This change is intended to reduce compliance burdens and will be effective from June 1, 2015.