If you haven’t filed your Income Tax Returns (ITR), it is high time that you do it before July 1 as failing to do so would attract a higher TDS/TCS rate, according to the Finance Act, 2021. The Finance Act has revamped the scope of tax collection from the very source so that correct income reporting is ensured by every assessee.
Come July 1, a person will be forced to pay extra TDS and that too 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.
Where new rule will not apply
Now Section 206AB of the Act will not be useful 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…Read more>>