Income Tax Return: TDS Rules Have Changed This Month,Everything You Should Know
The finance ministry announced a new rule in the Union Budget 2021 to deduct Tax Deducted At Source (TDS) at higher rates for non-filers. “In Budget 2021, a new Section 206AB was introduced to deduct TDS at a higher rate on cases with certain nature of income,” said by one expert. If you fall into a specified category, you will have to pay TDS at a higher rate starting in July.
Who has to Pay TDS at Higher Rates?
Taxpayers who have not filed an income tax return (ITR) in the previous two years and whose total TDS exceeds Rs 50,000 in each year will be required to pay TDS at a considerably higher rate beginning in July.
The Central Board of Direct Taxes (CBDT) said that the TDS rate will be either twice the rate set under the applicable section or provision, or 5%, whichever is higher.
How will it Work?
“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. It goes on to say that this feature is made available through the IRS’s reporting site.
The result of a single PAN Search will be displayed on the screen. Deductors will be able to download the results in PDF format from the tax department. The outcome of a mass search of PAN details will be available as a downloaded file.
How Income Tax Department is Making a List of TDS Non-Filers?
The tax agency has compiled a list as of the beginning of the fiscal year 2021-22, based on the previous years 2018-19 and 2019-20. The list includes the names of taxpayers who did not file a return of income for both the 2019-20 and 2020-21 assessment years and had a total TDS of Rs 50,000 or more in each of the preceding two years.
At the start of each fiscal year, a new list will be created that adheres to all of the CBDT’s requirements. During the fiscal year 2021-22, the tax agency will not add any new names to the list.
“The deductor or the collector may check the PAN in the functionality at the beginning of the financial year and then he is not required to check the PAN of non-specified person during that financial year,” said CBDT.
Section 206AB will not be Applicable for these Transactions
TDS deducted under Section 192 for pay or withdrawals from Provident Funds under Section 192A will not be affected by the newly enacted Section 206AB. TDS on winnings from card games, crossword puzzles, lottery tickets, puzzles, or any other games or horse races that fall within Section 194B or 194BB will be exempt from the new section. 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.
It will not be applied for deducting TDS on a lottery or a horse race under Section 194B or 194BB. Non-Resident Indians (NRIs) who do not have a permanent establishment in India will be exempt as well.
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