If you do not file ITR by June 30th,Prepare to pay a higher TDS starting next month
According to the Finance Act, 2021, non-filers of Income Tax Returns (ITRs) would be subject to a higher Tax Deducted At Source (TDS) rate starting next month. If a taxpayer has not filed TDS in the previous two years and the amount of TDS deducted each year exceeds Rs. 50,000, the tax department will demand a higher fee when filing the ITR beginning July 1.
“In the last budget, a new section 206AB was introduced to deduct a higher rate of TDS in the cases where income tax return not filed for the last two previous years and the TDS deducted in each of these two previous years exceeds ₹50,000. Basically, Government wants to ensure the filing of return of income by those people who have suffered a reasonable amount of TDS/TCS,” said by one expert.
The deadlines for filing income tax returns for the fiscal year 2021 have been extended by the Central Board of Direct Taxes (CBDT). According to the circular, the deadline for submitting Tax Deducted at Source (TDS) for the fourth quarter of fiscal year 2020-21 has been extended until June 30. Previously, the deadline for reporting the TDS was May 31.
“This is a major relief for the TDS deductors since these returns involve lot of records and data to be reported correctly,” said by one expert. As a result, the deadline for submitting Form 16 has been moved from June 15 to July 15.
Read Also: Things to keep in mind while filing income tax return this year
New TDS rule
The TDS rate will be higher than the limits listed here.
- Double the rate set forth in the relevant section of the Income Tax Act, whichever is higher.
- Double the current rate or rates, whichever is higher.
- At a rate of 5% per year.
The New Rule Won’t Be Applicable in These Cases
TDS deducted under Section 192 for salary or withdrawal from Provident Funds under Section 192A, as well as TDS on winnings from card games, crosswords, lottery, puzzles, or any other games and horse races under Section 194B or 194BB, will not be covered by the newly enacted Section 206AB. TDS on cash withdrawals over Rs 1 crore under Section 194N and income from investments in securitisation trusts under Section 194LBC would not be applied.
“If you are deducting TDS on salary income (192), lottery (194B), horse race (194BB), PF (192A), trust income(194LBC), and cash withdrawals (194N), then provisions of this section will not apply. Also, the same is not applicable for NRI’s, who does not have any permanent establishment in India,” said by one expert.
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