Income Tax ALERT! NEW TDS rules for DEFAULTERS from July 1 - All details you must be aware of

From July 1, 2021, the Income Tax department is implementing new functionality on its tax portal regarding the use of functionality under Section 206AB and 206CCA of the Income-tax Act.

The department will add two new sections to identify non-filers of income tax.

Income tax defaulters beware! From July 1, 2021, the Income Tax department is implementing new functionality on its tax portal regarding the use of functionality under Section 206AB and 206CCA of the Income-tax Act. If a taxpayer has not filed TDS in the last two years, and aggregate of TDS exceeds Rs 50,000 each year, then the department will charge more while filing the income tax returns from July 1.

The department will add two new sections to identify non-filers of income tax. These defaulters will be identified and levied higher Tax Deducted at Source (TDS). This comes in line with the announcements made in the Union Budget 2021.

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These sections mandate tax deduction (Section 206AB) or tax collection (Section 206CCA) at higher rate in case of certain non-filers (specified persons) with respect to tax deductions (other than under sections 192, 192A, 194B, 194BB, 194LBC and 194N) and tax collections.

Higher rate is twice the prescribed rate or 5 per cent, whichever is higher. Specified person means a person who satisfies both the following conditions: -

(i) He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted/ collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of Section 139 has expired.

(ii) Aggregate of tax deducted at source and tax collected at source is Rs 50,000 or more in each of these two previous years.

The Central Board of Direct Taxes (CBDT) has said, "It can be seen that the tax deductor or the tax collector is required to do a due diligence of satisfying himself if the deductee or the collectee is a specified person. This can lead to extra compliance burden on such tax deductor or tax collector."

It further mentioned that the tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or coIIectee and can get a response from the functionality if such deductee or collectee is a specified person. For PAN search, response will be visible on the screen which can be downloaded in the PDF format. For Bulk Search, response would be in the form of downloadable file, which can be kept for record.

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Income Tax Filing new TDS rules