CBDT warns against liability for interest for late prepayment of tax

NEW DELHI : The Central Board of Direct Taxes (CBDT) on Tuesday urged eligible taxpayers to pay their first installment of tax by June 15, warning that non-payment or underpayment of tax will result in interest being charged.

Withholding tax is applicable to taxpayers, including employees, whose liability to tax on the tax after taking into account taxes deducted or collected at source, is 10,000 or more, depending on the tax authority. Resident seniors with no income from work or a liberal profession are not subject to withholding tax.

The tax authority also said electronic payment is mandatory for all companies and assessees whose accounts are to be audited. Electronic payment is also convenient for other taxpayers as it ensures proper credit, CBDT said in a social media post.

Eligible taxpayers must pay their tax for the year in four installments in June, September, December and March. While the first payment should represent only 15% of the tax payable for the full year, in March the taxpayer must have fully paid the tax payable.

Withholding taxes and taxes collected or deducted at source are essential elements of the government’s revenue collection exercise, as the bulk of direct tax revenue is derived in this way. It also facilitates tax collection by the authority. TDS and TCS bonds help the tax administration to better control economic activities. From July 1, two other provisions of the TDS will come into force, one on virtual digital assets and the other on the benefits provided by companies as part of their sales promotion efforts, under the Section 194R of the Income Tax Act. These two provisions were introduced in the finance law for 2022. The government aims to $14.2 trillion in direct tax revenue in FY23.

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