Disallowance for non-deduction of tax from payment to resident
Summary :As per Finance Bill 2017 w.e.f 01.04.2017 FY 2017-18 (AY 2018-19) Disallowance u/s Section 40(a)(ia) for non-deduction of tax from payment to resident will now also apply under the head “income from other sources”.
Existing provisions of section 58 of income tax the Act, specify the amounts which are not deductible in computing the income under the head “Income from other sources” which include certain disallowances made in computation of income under the head “Profits and gains of business or profession”. These disallowances include disallowances such as disallowance of cash expenditure, disallowance for non-deduction of tax from payment to non-resident, etc.
For computing income under the head “Profits and gains of business or profession”, a disallowance is made for non-deduction of tax from payment to resident also. With a view to improve compliance of provision relating to tax deduction at source (TDS), it is proposed to amend the said section so as to provide that provisions of section 40(a)(ia) shall, so far as they may be, apply in computing income chargeable under the head “income from other sources” as they apply in computing income chargeable under the head “Profit and gains of business or Profession”.
This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
[Clause 30]
Relevant Extract of Clause 30 of Finance Bill 2017
Amendment of section 58.
30. In section 58 of the Income-tax Act, in sub-section (1A), for the word, brackets, figures and letter “sub-clause (iia)”, the words, brackets, figures and letters “sub-clauses (ia) and (iia)” shall be substituted with effect from the 1st day of April, 2018.
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