Apex tax body, the Central Board of Direct Taxes (CDBT) has allowed the income tax authorities to share information with scheduled commercial banks, aimed to reduce the lenders’ difficulties of deciding TDS (Tax Deducted at Source) deductibility on various payments to their customers.
Section 138 of the Income Tax Act empowers income tax authorities to share details of its taxpayers with other agencies. Nangia Andersen LLP Partner Sandeep Jhunjhunwala stated these banks in the list of bodies with which the tax authorities can share the information received from the taxpayers should reduce many administrative difficulties presently faced by the banking sector in the country.
This addition to Section 138 of the Income Tax Act would able to reduce the burden of scheduled commercial banks for identifying TDS deductibility on different payments to its clients. The move will especially help in cases such as TDS under Section 194N, which needs multiple income tax associated information and declaration from customers making a withdrawal, Jhunjhunwala added.
Apart from that he additionally added that sharing of details via the tax department might also enable banks to validate Forms 15G and 15H submitted by the customers, matching the information with tax return of earlier years.
The Central Board of Direct Taxes has permitted sharing of details by income tax authorities with scheduled commercial banks. Section 138 of the Income Tax Act empowers income tax authorities to share information of its taxpayers with other agencies.
The CBDT has stated that the income tax authorities can share information with scheduled commercial banks, a move that would reduce the lenders’ burden of deciding TDS deductibility on various payments to their customers. In a notification dated August 31, the Central Board of Direct Taxes (CBDT) included ‘scheduled commercial banks’, listed in the second schedule of the Reserve Bank of India Act, 1934, under Section 138 of the Income Tax Act for distributing of information.
