Tax Administration and Compliance
1. Widening the scope of Statement of Financial Transactions (SFT)
The provisions of section 285BA of the Act provide for furnishing of statement of financial transaction (SFT) or reportable account by person specified therein. It is proposed to obtain information by widening the scope of furnishing of statement of financial transactions by mandating furnishing of statement by certain prescribed persons (as may be prescribed by CBDT) other than those who are currently furnishing the same. It is also proposed to remove the current threshold of rupees fifty thousand on aggregate value of transactions during a financial year, for furnishing of information, with a view to ensure pre-filling of information relating to small amount of transactions as well. In order to ensure proper compliance, it is also proposed to amend the provisions of sub-section (4) of aforesaid section so as provide that if the defect in the statement is not rectified within the time specified therein, the provisions of the Act shall apply as if such person had furnished inaccurate information in the statement. Consequently, it is also proposed to amend the penalty provisions contained in section 271FAA so as to ensure correct furnishing of information in the SFT and widen the scope of penalty to cover all the reporting entities under section 285BA.
2. Online application for lower/nil TDS u/s 195 seeking determination of tax to be deducted at source on payment to non-residents
Sub-section (2) of the said section provides that where the person responsible for paying such sum chargeable under the Act to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted only on that proportion of the sum which is so chargeable. It is proposed to amend the said sub-section so as to empower the Board to prescribe the form and manner of making such application and the manner of determining the appropriate proportion of such sum chargeable. Sub-section (7) of the said section empowers the Board to specify a class of persons or cases, where the person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of sum chargeable to tax. It is proposed to amend the said sub-section so as to empower the Board to prescribe the form and manner of making such application and the manner of determining the appropriate proportion of such sum chargeable to tax. This will not only reduce the time for processing of such applications, but also help tax administration in monitoring such payments.
3. Electronic filing of statement of transactions on which tax has not been deducted
Section 206A of the Act relates to furnishing of statement in respect of payment of certain income by way of interest to residents where no tax has been deducted at source. At present, the section provides for filing of such statements on a floppy, diskette, magnetic tape, CD-ROM, or any other computer readable media. To enable online filing of such statements, it is proposed to substitute this section so as to provide for filing of statement (where tax has not been deducted on payment of interest to residents) in prescribed form in the prescribed manner. It is also proposed to provide for correction of such statements for rectification of any mistake or to add, delete or update the information furnished. It is also proposed to make a consequential amendment arising out of amendment carried out by Finance Act, 2019 whereby threshold for TDS on payment of interest by a banking company or cooperative society or public company was raised to Rs. 40,000.