CBDT notifies amendments to income-tax rules for simplified TCS, TDS claims

The Central Board of Direct Taxes (CBDT) announced amendments to income-tax rules to simplify the process of claiming credit for tax collected at source (TCS) or tax deducted at source (TDS) for salaried employees. These changes will also allow parents to claim TCS credit for minors.

Key amendments

As per the CBDT notification dated Wednesday, October 16, Rule 37-I of the Income Tax Act 1962 was “amended to allow credit of tax collected at source to a person other than the collectee, in whose hands the income of the collectee is assessable.”

This implies that if tax is collected at source, a person other than the one from whom the tax was collected can claim credit for the TCS, as long as the income for which the TCS was collected is taxable in the hands of that other person.

“Where under any provisions of the Act, the income of the collectee is assessable in the hands of any person other than the collectee, the credit for the tax collected at source, shall be given to such other person and not to the collectee,” the notification further stated.

The collectee will need to file a declaration with the collector that the TCS credit should be assigned to another person and the collector will then report the tax collection in the name of the other person.

“Provided that the collectee shall file a declaration with the collector and the collector shall report the tax collection in the name of the other person in the information relating to collection,” the notification further stated.

Declaration requirements

• Name
• Address
• PAN number of the person who is supposed to receive the credit of the TCS
• Amount of payment in relation to which the credit is to be given
• Reason for giving TCS credit to a person other than the collectee

The collector would be responsible for issuing the certificate of TCS under the name of the other person.

This amendment will also enable parents to claim TCS credit for their minor children, simplifying the credit collection process.

These changes will come into effect on the date they are published in the Official Gazette.