Here’s all you need to know about New TDS norms from July 1
The Income Tax department has introduced a new functionality wherein it can be decided who is eligible to pay Tax Deducted at Source (TDS) at higher rates from July 1. It is important to file your Income Tax Returns (ITR) before July 1 as failing to do so would attract a higher TDS/TCS rate, according to the Finance Act, 2021.
From July 1 onwards, a person will be required to pay extra TDS at a higher rate if he/she fails to file their Income Tax Returns for the last two years and has aggregate TDS/TCS credit of Rs. 50,000 or more in each of the two years.
The Section 206AB of the Income Tax Act 1961 states that the new TDS rate levied would be the highest of:
– Double the rate specified in the relevant provision of the Income Tax Act; or
– Double the rate of rates in force; or
– At the rate of five percent.
Meanwhile, for TCS collection, the rate under section 206 CCA of the Act will be higher and it will be double the rate mentioned in the relevant section; or 5 percent.
The Section 206AB of the Act will not be required for TDS deduction under sections 192 (Salary); 192A (Payment of accumulated balance due to an employee); 194B (Winnings from lottery or crossword puzzles); 194BB (Winnings from horse race); 194LBC (Income from investment in securitization trust); and 194N (Cash withdrawals).
Section 206AB will further not be applicable to non-resident deductee/collectee, who do not have a permanent establishment in India.
The tax collector or tax deductor has to check the eligibility of the person to pay TDS at a higher rate from July. “This can lead to extra compliance burden on such tax deductor or tax collector,” the Central Board of Direct Taxes (CBDT) said in a statement.
To ease the burden, the regulator has issued a new functionality “Compliance check for Sections 206AB & 206CCA”.
“The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response from the functionality if such deductee or collectee is a specified person,” the CBDT mentioned.
This functionality is made available through reporting portal of the Income-tax department, it further added…Read more>>