TDS Clarifying the Law or Drafting the Law Using Clarifications?

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The Tax Publishers Income Tax--TDS Clarifying the Law or Drafting the Law Using Clarifications? Srivatsan Ranganathan On the heels of the recently introduced TDS provisions under Section 194R; on 16th June 2022, vide Circular 12/2022 the CBDT came out with a slew of clarifications on this section Even before that ink dried, another Circular 18/2022 has been issued dated 13th September 2022 on the same section with more clarifications. The author has discussed the same in this write up. 1. Prophetic Palkhivala Eminent jurist Nani Palkhivala remarked 'Today the Income-Tax Act, 1961, is a national disgrace. There is no other instance in Indian Jurisprudence of an Act mutilated by more than 3000 amendments in less than thirty years, simple provisions like Sections 11 to 13 (which deal with exemption of the income of charitable Trusts) have suffered no less than fifty amendments. The tragedy of India is the tragedy of waste of national time, energy and manpower. Tens of millions of men - hours, crammed with intelligence and knowledge - of tax gatherers, tax payers and tax advisors - are squandered every year in grappling with the torrential spate of mindless amendments. The feverish activity achieves no better than fever?' The above words remain testimonial to all times. Readers will recollect the introduction of Section 194R vide Finance Act, 2022 which fastens TDS on perks, gifts, sponsorships whether in cash or in kind to attract a TDS of 10%, if the value in the financial year (April-March) exceeds Rs. 20,000. This section came in the statute w.e.f. 01-4-2022 but it was pressed into service only from 1-7-2022. Accordingly various clarifications were issued by the CBDT vide their Circular No. 12/2022, dated 16th June 2022. Once again another Circular No. 18/2022, dated 13th September 2022 has been issued clarifying more on this section Let's discuss some of the points which are discussed in this new circular. Am calling it new circular to distinguish it from Circular No. 12/2022for easy reading. 2. Compounding clarifications 1. No TDS will be warranted if the payee is individual/HUF unless their turnover/sales/gross receipts exceeds Rs. 1 crore if from business and Rs. 50 lakhs from profession. 2. Circular 18/2022 clarifies explicitly that it is only for removing difficulties in implementation and not for discussing the taxability of such income in the hands of the recipient. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--TDS

Clarifying the Law or Drafting the Law Using Clarifications?

Srivatsan Ranganathan

On the heels of the recently introduced TDS provisions under Section 194R; on 16th June 2022, vide Circular 12/2022 the CBDT came out with a slew of clarifications on this section Even before that ink dried, another Circular 18/2022 has been issued dated 13th September 2022 on the same section with more clarifications. The author has discussed the same in this write up.

1. Prophetic Palkhivala

Eminent jurist Nani Palkhivala remarked 'Today the Income-Tax Act, 1961, is a national disgrace. There is no other instance in Indian Jurisprudence of an Act mutilated by more than 3000 amendments in less than thirty years, simple provisions like Sections 11 to 13 (which deal with exemption of the income of charitable Trusts) have suffered no less than fifty amendments.

The tragedy of India is the tragedy of waste of national time, energy and manpower. Tens of millions of men - hours, crammed with intelligence and knowledge - of tax gatherers, tax payers and tax advisors - are squandered every year in grappling with the torrential spate of mindless amendments. The feverish activity achieves no better than fever?'

The above words remain testimonial to all times. Readers will recollect the introduction of Section 194R vide Finance Act, 2022 which fastens TDS on perks, gifts, sponsorships whether in cash or in kind to attract a TDS of 10%, if the value in the financial year (April-March) exceeds Rs. 20,000. This section came in the statute w.e.f. 01-4-2022 but it was pressed into service only from 1-7-2022. Accordingly various clarifications were issued by the CBDT vide their Circular No. 12/2022, dated 16th June 2022. Once again another Circular No. 18/2022, dated 13th September 2022 has been issued clarifying more on this section Let's discuss some of the points which are discussed in this new circular. Am calling it new circular to distinguish it from Circular No. 12/2022for easy reading.

2. Compounding clarifications

1. No TDS will be warranted if the payee is individual/HUF unless their turnover/sales/gross receipts exceeds Rs. 1 crore if from business and Rs. 50 lakhs from profession.

2. Circular 18/2022 clarifies explicitly that it is only for removing difficulties in implementation and not for discussing the taxability of such income in the hands of the recipient.