Date of coming into force of Finance (Amendment) Act, 1987. - Income Tax - 1788/CBDT

INSTRUCTION NO. 1788/CBDT Dated: April 6, 1988 The Finance (Amendment) Bill, 1987, received the assent of the President on the 16th December, 1987 and has since been enacted. The assent of the Bill by the President was, however announced in the newspapers and other media only on the 2nd January, 1988. The provisions of this Act provide that in respect of any amount of tax deducted at source on payments made to a person other than a company being resident in India or to a domestic company, on income by way of interest, winnings from lotteries and crossword puzzles, winnings from horse races, insurance commission and the payments to the contractors, the amount of tax deducted at source shall be increased by a surcharge calculated at the rate of 5 per cent of such income-tax. This provision has come into force from the date of Bill was enacted. Hence, in respect of any payment made on or after the 16th December, 1987 the amount of Tax deducted at source has to be increased by surcharge. 3. Several organisations have represented that they were not aware till the 2nd January, 1988, (the date on which it was announced through the media) that the bill has been enacted and, as such, in respect of the payments made during the period 16th December, 1987 to 2nd January, 1988, the amount of tax deducted at source has not been increased by the surcharge. 4. On a consideration of the representations received in this regard it has been decided that where in respect of any payment made on or after 16th December, 1987, but before 3rd January, 1988 the amount of income-tax deducted at source has not been increased by the surcharge, the person responsible for deduction or the company, as the case may be, shall not be treated as an assessee in default for the purposes of levy of interest under section 201 (1A) and penalty under section 221 of the Income-tax Act. In such cases, prosecution proceedings under sections 276B shall also not be initiated. 5. These instructions may be brought to the notice of all officers working in your charge.