New TDS rule: If you have not filed your income tax return (ITR) or do not file ITR then you might have to pay a higher amount of TDS/TCS from July 1, 2021. This is because as per an announcement made in Budget 2021, a person who has not filed ITR for the previous two financial years and the aggregate TDS and TCS deducted from payments made to him/her in each of these financial years exceeds Rs 50,000, then such person would be subjected to higher TDS rate. This will rule will come into effect from July 1, 2021.
The Central Board of Direct Taxes (CBDT) issued a circular on Monday on the implementation of Sections 206AB and 206CCA with respect to higher tax deduction/collection for certain non-filers.
“CBDT issues Circular No. 11 of 2021 dated 21.06.2021 on implementation of section 206AB & 206CCA wrt higher tax deduction/collection for certain non-filers. New functionality issued for compliance checks for sec 206AB & 206CCA to ease the compliance burden of tax deductors/collectors,” the income tax department tweeted.
To simplify this: Suppose you have not filed income tax returns for FY 2018-19 and 2019-20. However, you have fixed deposits, dividend income, interest from recurring deposits etc. where aggregate TDS exceeded Rs 50,000 in each financial year. In such a scenario, you will be subjected to a higher TDS rate on the incomes from July 1, 2021.
The tax department has prepared a list as on the start of the financial year 2021-22, taking previous years 2018-19 and 2019-20 previous years. The list contains name of taxpayers who did not file return of income for both assessment years 2019-20 and 2020-21 and have aggregate of TDS of Rs 50,000 or more in each of these two previous years.
“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.
- To whom new law applies
Higher TDS will be deducted from the income of a person if he/she satisfies the following conditions:
a) Individual has not filed income tax return in the previous two financial years for which due date has expired as per section 139(1) of the Income-tax Act, 1961;
b) Sum of TDS and TCS in each of the financial years is Rs 50,000 or more.
Higher TDS/TCS rate
The TDS rate that will be applicable to such individuals will be higher of the following:
a) Twice the rate specified in the relevant section;
b) Twice the rate or rate in force; or
c) 5%
