RECENT AMENDMENTS FOR TAX DEDUCTION AND TAX COLLECTION AT SOURCE

1. BACKGROUND
The scope for Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) has been enlarged in the last three Budgets presented by our Finance Minister, Smt. Nirmala Sitharaman, in 2020, 2021 and 2022. Various Sections of the Income-tax Act (Act) dealing with TDS and TCS have been amended, and some new sections are added for this purpose. All these amendments have increased the compliance burden on taxpayers. In this article, the various amendments made in the Act in the last three years are discussed.

2. SECTION 192: TDS FROM SALARIES
Finance Act, 2020, amended this Section, effective from A.Y.2021-22 (F.Y.2020-21). Section 17(2)(vi) of the Act provides for taxation of the value of any specified securities or sweat equity shares (ESOP) allotted to any employee by the employer as a perquisite. The employer must deduct tax at source on such perquisite at the time of exercise of option u/s 192.

To ease the burden of Start-Ups, the amendments in this Section provide that a company which is an eligible start-up u/s 80IAC will have to deduct tax at source on such income within 14 days (i) after the expiry of 48 months from the end of the relevant assessment year, or (ii) from the date of sale of such ESOP shares by the employee or (iii) from the date on which the employee who received the ESOP benefit ceases to be an employee of the company, whichever is earlier. For this purpose, th