TDS - The time and mode of payment to Government account of tax deducted at source - Income Tax - 898/CBDT

INSTRUCTION NO. 898/CBDT Dated : November 20, 1975 Section(s) Referred: 192 , Rule 30(1)(b)(ii) of IT Rule , Rule 32(1) and 34 of IT Rules Statute: Income - Tax Act, 1961 Duty is cast u/s 200 of the Income-tax Act on a person deducting tax at source in accordance with the provisions of the sections 192, 194, 194-A, 194-B, 194-D and 195 to pay within the prescribed time the sum so deducted to the credit of the Central Government. 2. The time and mode of payment to Government account of tax deducted at source is laid down under Rule 30(1) of the Income-tax Rules. Under Rule 30(1)(b)(ii) all sums deducted in accordance with the provisions of section 192 shall within one week from the date such deduction was made or the date of receipt of the challan by the person making the deduction, as the case may be, be paid to the credit of the Central Government. Proviso to Rule 30(1)(b)(ii) lays down that the Income-tax Officer may, in special cases, and with the prior approval of the Inspecting Asst. Commissioner, permit an employer to pay Income-tax deducted from income chargeable under the heads 'salaries' quarterly on June 15, September 15, December 15 and March 15 respectively. 3. Rule 32 (1) provides that in the case of income chargeable under the head 'salaries' where deduction is made except by or on behalf of the Government, the person responsible for paying the income shall forth-with send a return in the prescribed from to the Income-tax Officer as modified under the Rule. Under Rule 34, the Commissioner may, in his discretion, except where deduction is made by or on behalf of the Government, waive the requirement of the monthly return under Rule 32 subject to the conditions laid down therein and such other conditions as he may prescribe. 4. Thus, under the rules, while the Income-tax Officer, with the prior approval of the Inspecting Asst. Commissioner, is permitted to allow an employer to pay income-tax deducted from any income chargeable under the head 'salaries' in quarterly instalments, it is the Commissioner of Income-tax who, in his discretion, may waive the monthly returns required to be filed under the rules. 5. Instances have come to notice from some charges where the Income-tax Officers have, with the prior approval of the Inspecting Asst. Commissioner, granted permission for payment of tax deducted at source under the head 'salaries' in quarterly instalments in case of large businss businessemployers. The permission granted by the Income-tax officer to such big employers appears to be misconceived as the deduction of tax at source in these cases would be substantially large and the permission granted enables the employers to retain in their possession for a period of three months at a time large funds due to the Government. This is against the intention underlying the duty cast on the employer under Rule 30 (1). Such discretion to allow retention of Government Funds by the employers may also lead to other malpractices. 6. The intention of the proviso under which Income-tax Officers have the discretion to grant such permission to the employers is only to afford such facility to small employers whose total tax deduction bill is so paltry that they would be put to unnecessary difficulties in remitting them in the Treasuries. Reserve Bank every month. In other words, the intention is to minimise paper work in the Income-tax office as well as the employer's office where the tax deducted is too small to justify monthly payments and returns. 7. There is an apparent confusion in the minds of Income-tax Officers exercising such discretion under Rule 30(1)(b) proviso that because of the voluminous transactions that have to be recorded in the monthly deduction statements, granting of such quarterly instalments under the rule would be permissible. The monthly return of deduction of tax from salaries, as has already been indicated is required to be filed under Rule 32(1) and this can be waived only by the Commissioner of Income-tax under Rule 34 subject to the conditions laid down therein and any other conditions that he may prescribe. Therefore, if an employer feels that the statements required are voluminous, the remedy is not under Rule 30(1) to ask for permission to pay/credit in quarterly instalments but to apply to the Commissioner for suitable waiver of monthly returns under Rule 34. 8. In these circumstances, it has now been considered necessary to spell out by way of specific instructions, that the Income-tax Officer shall not exercise his discretion under Rule 30(1) in favour of employers whose monthly tax deduction from employers' salaries exceeds say a sum of Rs. 500 per month. The Income-tax Officers should take immediate steps to withdraw such concession already given in cases involving large deduction of tax at source. The Commissioners of Income-tax are requested to have a review of all such concessions already granted. At the time of withdrawing the concession of quarterly payment from big assessees, the Income-tax Officers may bring to their notice the provisions of Rule 34 whereunder they may, if they so desire, apply to the Commissioner of Income-tax for waiver of the requirement of Rule 32 regarding the submission of the detailed monthly return.