Friday, 13 February 2015

CBDT clarifies on the quantum of disallowance for failure to withhold taxes at source on payments to a non-resident



This tax alert summarizes a recent Circular (Circular) issued by the Central Board of Direct Taxes (CBDT) on the quantum of disallowance of “other sum chargeable”, if the payer makes default  in complying with the withholding tax (WHT) provisions.  The Circular clarifies that the quantum of disallowance of “other sum chargeable” is not the gross payment, but that appropriate portion representing “sum chargeable tax”.

 

The Circular is a welcome step of the CBDT in clarifying the issue of quantum of disallowance.  This being clarificatory in nature, may be considered as applying to all pending cases of assessment and litigation as well. Taxpayers may, therefore, wish to review disallowances on account of default of withholding taxes and consider appropriate course of action.



http://www.incometaxindia.gov.in/communications/circular/circular3_2015.pdf

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