TaxTMI 
TaxTMI 
Transforming Tax Deduction and Collection : Clause 390(1) - (3) of the Income Tax Bill, 2025 Vs. Section 190 of the Income-tax Act, 1961
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.... Collection at Source (TCS), and advance tax payments. The transition from the 1961 Act to the proposed 2025 Bill represents not only a legislative update but also an opportunity to modernize and clarify the tax collection machinery, ensuring alignment with contemporary economic realities and technological advancements. The commentary herein undertakes a detailed analysis of Clause 390(1)-(3) of the Income Tax Bill, 2025, juxtaposed with the corresponding Section 190 of the Income-tax Act, 1961. The analysis is structured to examine the legislative intent, detailed provisions, practical implications, and the comparative legal landscape, with a focus on the nuanced similarities and distinctions between the two statutory regimes. Objective a....
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....hich income tax is to be paid: deduction or collection at source (encompassing both TDS and TCS), advance payment, and a specific payment method u/s 392(2)(a). This clause is a direct evolution of Section 190(1) of the 1961 Act, which similarly requires tax to be paid by deduction or collection at source, advance payment, or payment under sub-section (1A) of section 192. The inclusion of "payment u/s 392(2)(a)" in the 2025 Bill suggests a deliberate legislative effort to recognize or expand upon specific payment mechanisms that may not have been as explicitly addressed in the earlier Act. This could potentially relate to special cases such as payments by employers not strictly falling within the classical TDS framework, or other unique scen....
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....e 390(3) serves as a savings provision, clarifying that the procedural mechanisms for collection or payment of tax do not in any way derogate from the substantive charging provision contained in section 4(1). The charge to tax arises u/s 4(1), and the collection mechanisms under Clause 390 are merely modalities for giving effect to that charge. This is in line with Section 190(2) of the 1961 Act, which states, "Nothing in this section shall prejudice the charge of tax on such income under the provisions of sub-section (1) of section 4." The use of the phrase "shall prejudice" in the 1961 Act and "shall affect" in the 2025 Bill are functionally equivalent, both serving to insulate the charging provision from any procedural limitations or int....
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....tion do not undermine the substantive liability to tax. * Structural and Drafting Differences: The 2025 Bill's drafting is more explicit and detailed, particularly in Clause 390(1) and the subsequent sub-clauses (notably sub-clauses (4)-(6), though the present analysis focuses on (1)-(3)). The inclusion of specific cross-references (e.g., section 392(2)(a)) and the use of the term "this Chapter" indicate a move towards greater legislative clarity and precision. * Terminological Updates: While the 1961 Act refers to "assessment year," the 2025 Bill uses "tax year," possibly reflecting a shift towards international terminology and an attempt to harmonize tax periods with global best practices. Practical Implications The provisions u....
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....in ambiguities and interpretational challenges may arise: * Scope of "Payment u/s 392(2)(a)": The reference to section 392(2)(a) in Clause 390(1) may require further elucidation, particularly if it introduces new categories of payments not previously covered under the 1961 Act. The precise contours of this provision will depend on the text of section 392(2)(a), which may address specific scenarios such as payments by non-residents or digital transactions. * Overlap and Double Payment: There may be situations where income is subject to both TDS/TCS and advance tax, leading to potential disputes regarding the sequencing and credit of such payments. The rules to be framed under the Bill (as per Clause 390(6)) will be critical in resolving ....