Haven’t filed ITR? Now, pay more TDS
There are existing provisions that provide for deduction of TDS or TCS at higher rates in case of non-furnishing of PAN card The new provisions target those who have PAN numbers but have not filed ITR
To make more people file income tax returns (ITR), the finance minister has proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates in budget 2021 for those who don’t file ITR. The budget has proposed insertion of new Sections 206AB and 206CCA for the deduction of higher rates of TDS and TCS, respectively.
So, TDS or TCS will be deducted at twice the applicable rate as per the Act or 5% whichever is higher. There are two conditions attached to it. One, the person shouldn’t have filed ITR for the past two years, and a TDS or TCS of more than ₹50,000 was deducted in each of the past two years from that person.
There are existing provisions that provide for deduction of TDS or TCS at higher rates in case of non-furnishing of PAN card. The new provisions target those who have PAN numbers but have not filed ITR. As per the Income Tax Act, Sections 206AA and 206CC provide for deduction of TDS or TCS at higher rates in cases where the person doesn’t provide PAN. So, in case a person doesn’t furnish a PAN card to the bank, then a TDS at a higher rate (20% instead of 10%) will be deducted on interest earned. These provisions have ensured that more PAN cards are issued, but the same has not resulted in more people filing ITR.
The new provisions are expected to ensure that a higher number of people file ITR.
“In cases where the TDS or TCS provisions were up to 1 or 2%, people used to treat it as a cost of business and absorbed it. The increase in the TDS and TCS rate will prevent them from doing so," said Rahul Garg, senior tax partner, Pwc India.
This provision shall not be applicable for transactions where the full amount of tax is required to be deducted, for example, salary income, payment to a non-resident, etc.
Source: LiveMint
