These taxpayers may have to pay double TDS from July
With effect from July 1, 2021, a person will have to pay TDS at a higher rate if they have not filed Income Tax Returns for the last two years and has aggregate TDS/TCS credit of Rs 50,000 or more
New Delhi: From July onwards, some taxpayers may have to pay Tax Deducted At Source (TDS) at higher rates. According to Finance Act 2021, if a taxpayer has not filed TDS in the last two years and TDS deducted each year exceeds of Rs 50,000, the Income Tax department will charge more while filing the income tax returns (ITR) from July 1.
To recall, in Budget 2021, a new section 206AB was introduced to deduct TDS at a higher rate on cases with certain nature of income where the return of income not filed for the previous two years and TDS deducted in each year exceeds Rs 50,000. In order to penalize those who did not file income tax returns despite being liable, the government notified new Section 206AB and 206CCA under Income Tax Act.
This TDS provision prescribes a higher rate of deduction of tax in the case of specified persons. The specified person, in this case, could be:
- Anyone who has not filed the IT return for two previous years; and
- The time limit to file IT return u/s 139(1) has lapsed; and
- Total aggregate tax deducted or collected at source in his case in each of these previous two years exceeds Rs 50,000
The rate of TDS will be higher of the below limits
- Twice the rate specified under the relevant section/provision or
- Twice the rate/rates in force or
- Rate of five per cent.
For TCS collection, the rate under section 206CCA of the Act will be higher of: Double the rate specified in the relevant section; or 5 per cent
The newly implemented Section 206AB will not be applicable for TDS deducted under Section 192 for salary or withdrawal from Provident Funds under Section 192A. TDS on winning from the card game, crossword, lottery, puzzle or any other games and horse race under Section 194B or 194BB will also not come under the purview of new section.
It will not be applicable for TDS on cash withdrawal over Rs 1 crore under Section 194N and income against investment in the securitisation trust under Section 194LBC. Section 206AB will also not be applicable to non-resident deductee/collectee, who do not have a permanent establishment in India.
It is worth adding that the Central Board of Direct Taxes (CBDT) has extended the deadlines to file income tax returns for the financial year 2021. The last date of filing Tax Deducted at Source (TDS) for the fourth quarter of financial year 2020-21 has been extended to June 30. Earlier, the due of filing the TDS was May 31. Accordingly, the due date of issuance of Form 16 has also been extended to July 15 from June 15.