Time Limit Extension for TCS Default Orders Under Section 206C Effective April 2025

Last updated: 04 February 2025

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From April 1, 2025, new rules will apply to the time limits for issuing orders deeming a person as an assessee in default for failing to collect tax under Section 206C. The existing six-year limit from the financial year of collectibility, or two years from the correction statement's delivery, will now be subject to provisions similar to Section 153 of the Act. This amendment also clarifies that periods where proceedings were stayed by a court order should be excluded when calculating these time limits.

Excluding the period such as court stay etc. for calculating time limit to pass an order

Sub-section (7A) of section 206C of the Act provides that no order shall be made deeming a person to be an assessee in default for failure to collect the whole or any part of the tax from any person, after the expiry of six years from the end of the financial year in which tax was collectible or two years from the end of the financial year in which the correction statement is delivered under subsection (3B) of section 206C of the Act, whichever is later.

TCS Default Orders: Time Limit Extension from April 2025

2. While computing the time limit under sub-section (7A) of section 206C of the Act, exclusion of the time period such as period for which proceedings were stayed by an order of any court, etc. is required to be provided.

3. It is proposed that sub-section (7A) of section 206C of the Act is to be amended to provide that relevant provisions of section 153 of the Act would apply to the time limit prescribed in sub-section (7A) of section 206C of the Act.

4. The amendment will take effect from the 1st day of April, 2025.

[Clause 67]

FAQ :

The amendment will take effect from the 1st day of April, 2025.

Section 206C of the Act relates to the collection of tax by an assessee from any person.

Currently, no order can be made deeming a person to be an assessee in default after six years from the end of the financial year in which tax was collectible, or two years from the end of the financial year in which the correction statement is delivered, whichever is later.

The relevant provisions of Section 153 of the Act will apply to the time limit prescribed in sub-section (7A) of Section 206C.

Yes, when computing the time limit, the time period for which proceedings were stayed by an order of any court, etc., is required to be excluded.

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