TaxTMI 
TaxTMI 
TaxTMI 
Streamlining TDS Exemptions in India's Income Tax Laws - Clause 393(6) of the Income Tax Bill, 2025 Vs. Section 197A of the Income-tax Act, 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
....g of a declaration by eligible recipients. The evolution of this provision reflects legislative intent to balance efficient tax collection with the protection of taxpayers' rights, especially those whose income falls below the taxable threshold. This commentary provides a comprehensive analysis of Clause 393(6), its objectives, operative mechanics, practical implications, and a detailed comparison with Section 197A of the 1961 Act. The discussion will elucidate the continuities, reforms, and new compliance burdens or reliefs introduced by the 2025 Bill, considering the broader context of TDS administration in India. Objective and Purpose The legislative intent behind both Clause 393(6) and Section 197A is to prevent unnecessary withho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to in such provisions, a written declaration in duplicate in such form and manner as prescribed that the tax on such person's estimated total income of the tax year in which such income or sum is to be included in computing his total income shall be nil." The operative elements of Clause 393(6) are as follows: * Scope of Application: The provision applies to specific categories of income and persons, as enumerated in the accompanying Table. This includes individuals, senior citizens, and certain non-corporate entities in relation to specified payments such as interest, dividends, insurance commission, rent, and life insurance proceeds. * Declaration Mechanism: The recipient of the income must furnish a written declaration (in dupli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er range of payments than the original Section 197A, reflecting changes in the tax landscape and the emergence of new forms of income. * Explicit Threshold Condition:- The provision unequivocally states that the aggregate of such incomes must not exceed the basic exemption limit, thereby codifying a principle that was previously implicit or scattered across sub-sections in Section 197A. * Integration with Digital Compliance:- While not explicit in the text, the move towards a prescribed form and manner suggests an intent to harmonize with digital filing and reporting systems, in line with broader e-governance initiatives. * Clarity on Senior Citizens:- The Table makes clear distinctions for senior citizens, offering them specific reli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....abuse of the declaration mechanism. For Senior Citizens and Non-corporate Entities * Special Reliefs: Senior citizens benefit from higher thresholds and broader coverage, reflecting social welfare objectives. Potential Issues and Ambiguities * Estimation of Income: The requirement that the tax on "estimated total income" be nil places the onus on the taxpayer to accurately forecast income, which may not always be feasible, especially for those with variable or uncertain income streams. * False Declarations: There is a risk of misuse, either inadvertently or deliberately, which could lead to interest and penalty liabilities. * Overlap with Other Provisions: The interplay between Clause 393(6) and other TDS exemptions or lower....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible Persons Section 197A generally applies to individuals who are residents, with certain sub-sections extending relief to persons other than companies or firms. It also contains special provisions for senior citizens (Section 197A(1C)). Clause 393(6) follows this approach but provides a more detailed and explicit categorization of eligible persons in its Table, including specific references to senior citizens and other non-corporate entities. 4. Declaration Mechanism Both provisions require the declaration to be in the prescribed form (currently Form 15G for individuals and Form 15H for senior citizens under the 1961 Act), in duplicate, and verified in the prescribed manner. Clause 393(6) continues this procedural requirement, with the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Persons Individuals (residents), some non-corporate entities, senior citizens Individuals (residents), senior citizens, other specified non-corporate entities Eligible Incomes Interest, dividends, insurance commission, rent, units, etc. Expanded: includes above plus new categories (e.g., life insurance proceeds, accumulated balances) Threshold Condition Aggregate income not to exceed basic exemption limit Explicitly codified; same principle Declaration Form Prescribed form (15G/15H), in duplicate Prescribed form, in duplicate; likely digital Obligation on Payer No TDS upon valid declaration; forward copy to tax authority Same; explicit reporting timeline retained Special Provisions Offshore banking, NPS Trust....