CBDT Amends Rules 31AA & 37-I | Specifies Conditions for Allowing TCS Credit to a Person Other Than the Collectee

Notification No. 114/2024, dated 16-10-2024

The Finance (No. 2) Act 2024 inserted a new sub-section (12) to Section 206C with effect from 01-10-2024, which allows for the notification of specific transactions or individuals to whom the TCS provisions will either be entirely exempt or applied at a reduced rate. Further, Section 206C(4) is amended to allow the transfer of TCS credit to any other person.

To incorporate such amendments, the Central Board of Direct Taxes (CBDT) has amended Rule 31AA to allow reporting transactions where tax has been collected at a lower rate. The amendment allows the furnishing of details of the amount received or debited on which tax was collected at a lower rate in view of any notification issued under section 206C(12).

Further, Rule 37-I has also been amended to allow reporting of tax collection in the name of a person other than the collectee. In case 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.

However, the collectee is required to submit a declaration to the collector, who will report the tax collection in the name of another person. The declaration should include the name, address, and permanent account number of the person to whom the credit for tax collected at source (TCS) is to be given, along with the payment amount and the reasons for granting credit to that person. The collector shall then issue the certificate for TCS under section 206C(3) in the name of the other person. The collector is also required to retain the declaration safely.

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