TCS amendments proposed in the Budget 2025:

 

1.  TCS on sale of goods:

Under Section 206C(1H), sellers were required to collect TCS at 0.1% on the sale of goods exceeding ₹50 lakh in a financial year. Section 194Q also mandates buyers to deduct TDS on payments made for goods exceeding ₹50 lakh, creating the possibility of double tax compliance (both TDS and TCS) for the same transaction.

To reduce this overlap and confusion, TCS under Section 206C(1H) is proposed to be removed from 1st April 2025.

 2.  Higher TDS Rates:

Section 206AB and Section 206CCA currently impose higher TDS/TCS rates on individuals and entities that have not filed their income tax returns in the previous year. However, verifying whether a person is a non-filer at the time of tax deduction or collection can be cumbersome and error-prone.

To reduce this burden, both Section 206AB and Section 206CCA is proposed to be omitted from the Income Tax Act, starting 1st April 2025. This change will eliminate the higher tax rates for non-filers, making compliance simpler and reducing the risk of errors in TDS/TCS collection.

 3.  Prosecution:

Section 276BB currently provides for prosecution in cases where a person fails to pay TCS to the credit of the Central Government within the prescribed time. This can result in rigorous imprisonment.

In an effort to provide relief to taxpayers, Section 276BB will be amended to allow an exemption from prosecution for delayed payment of TCS, as long as the tax has been deposited before the deadline for filing the quarterly statement under Section 206C(3).

This provision will reduce the likelihood of criminal prosecution for inadvertent delays in TCS remittance, provided the payment is made before the statutory deadline.