The Finance Bill proposes a major change by giving statutory backing to guidelines issued by the CBDT, making them mandatory for both tax authorities and taxpayers. Historically, these circulars were only binding on the tax department, while taxpayers remained free to challenge them or rely strictly on the bare text of the Income Tax Act.
Under this stricter regime, anyone responsible for deducting or collecting tax (TDS/TCS) must now follow the CBDT’s specific interpretations, even in “grey zones” like virtual digital assets or business perquisites. This move significantly strengthens the legal status of CBDT instructions, leaving less room for independent interpretation and requiring taxpayers to align their compliance strictly with departmental guidelines.