How New Income Tax Bill Proposes The Collection And Recovery Of Tax
The Indian government has unveiled a comprehensive Income Tax Bill, 2025, aiming to replace the existing Income-tax Act, 1961. This new legislation proposes significant changes to the way income tax is collected and recovered, with a focus on streamlining processes and enhancing efficiency.
The Bill’s Chapter XIX, dedicated to “Collection and Recovery of Tax,” outlines a new framework for tax collection, encompassing various aspects like advance tax payments, tax deduction at source (TDS), tax collection at source (TCS), and recovery of tax arrears.
Advance Tax: The Bill mandates that taxpayers liable for advance tax must make payments in four instalments, with due dates specified in the rules. The legislation also introduces a provision for deeming an assessee to be in default if they fail to pay advance tax as per the Assessing Officer’s order.
Tax Deduction at Source (TDS): The Bill outlines provisions for TDS on salaries, accumulated balance of an employee’s provident fund, and various other payments. It also empowers the Central Government to relax TDS provisions in certain cases.
Tax Collection at Source (TCS): The Bill specifies provisions for TCS on various transactions, including those involving the sale of goods and services. It also introduces a mechanism for issuing certificates for lower deduction of tax.
Recovery of Tax Arrears: The Bill outlines a comprehensive framework for recovering tax arrears, including provisions for issuing demand notices, levying penalties for default, and recovering tax through the State Government. It also empowers the Tax Recovery Officer to stay recovery proceedings in certain cases.
Electronic Modes of Payment: The Bill encourages the use of electronic modes for tax payments, including advance tax, TDS, and TCS. It also restricts the acceptance of cash payments exceeding a specified sum, promoting transparency and accountability.
Faceless Assessment: The Bill introduces the concept of “faceless assessment,” where eligible cases are assigned to specific Assessment Units through an automated allocation system. This aims to enhance efficiency, transparency, and accountability in the assessment process.
Dispute Resolution Panel: The Bill proposes a scheme for referring disputes to a Dispute Resolution Panel, providing an alternative mechanism for resolving tax-related disagreements.
Other Key Provisions: The Bill also includes provisions for:
* Refund of Excess Tax: The Bill outlines procedures for refunding excess tax paid by taxpayers.
* Penalties: The Bill specifies penalties for various tax-related offences, including under-reporting of income, failure to maintain books of account, and non-compliance with TDS and TCS provisions.
* Punishment: The Bill outlines punishments for tax evasion, including imprisonment and fines.
* Presumption: The Bill introduces provisions for presumption regarding assets, books of account, and culpable mental state in certain cases.
* Prosecution: The Bill specifies the authority required for launching prosecution proceedings for tax-related offences.
