Highlights:
- Budget 2021 included a provision requiring non-filers of income tax returns for the previous two fiscal years to pay higher TDS and TCS rates.
- CBDT has released a new utility tool called ‘Compliance Check for Section 206AB & 206CCA’ to help tax deductors with their compliance burden.
Non-filers of income tax returns for the last two fiscal years will face a higher tax deducted at source (TDS) and tax collected at source (TCS) rate starting tomorrow (July 1) if the tax deduction was Rs. 50,000 or more in those two years each.
CBDT has released a new utility tool called ‘Compliance Check for Section 206AB & 206CCA’ to help tax deductors keep track on non-filers.”
The Central Board of Direct Taxes has released a new functionality called “Compliance Check for Sections 206AB & 206CCA” to help with this compliance burden. This feature is currently available through the income tax department’s reporting portal (https://report.insight.gov.in),” CBDT said.
How will this new utility tool work?
Single PAN search: A tax deductor or collector can enter the deductee’s or collectee’s single PAN (PAN search) into the portal and receive a response from the functionality whether the deductee or collectee is a ‘specified person.’ The response of a PAN search will be displayed on the screen and can be downloaded in PDF format.
Bulk search: The tax deductor or collector can submit several PANs (bulk search) of the deductee or coIIectee to the portal and get a result from functionality. The CBDT noted that the response for bulk searches would be in the form of a downloadable file that could be saved for future reference.
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Only at the start of the financial year could TDS deductors and TCS collectors be required to check the functionality of the PAN of the vendor from whom TDS or TCS is to be deducted or collected.
The tax department has compiled a list of taxpayers who did not file income tax returns at the start of the financial year 2021-22, based on the past years 2018-19 and 2019-20.
Following the second wave of Covid-19, the Central Board of Direct Taxes (CBDT) recently extended certain income tax dates to provide some relief. Taxpayers now have time till July 15 to register their TDS for the last quarter of financial year 2020-21.
New TDS rule:
The new measures in the Union budget for 2021-22 go into effect on July 1st. If the amount of TDS deducted is 50,000 or more, the tax deductor/collector is required to check if the income earner has filed returns for the previous two years, according to Abhishek Murali, Chairman, Direct Taxes Committee, Southern India Regional Council of Institute of Chartered Accountants of India.
The new income tax portal now allows you to check simply inputting your PAN numbers. If the returns are not filed, TDS will be deducted at the rate of double the current TDS rate or 5%, whichever is higher.
Where does the new TDS rule not apply?
“The rules of this section will not apply if your total TDS deduction in the previous year was less than 50,000 or if you are filing your income tax return on a regular basis for the past two years,” Abhishek Soni explained.
Furthermore, if TDS is to be deducted on salary income (192), PF income (192A), lottery income (194B), horse race income (194BB), trust income (194LBC), and cash withdrawals (194N), the rules of this section do not apply. He further added that a higher TDS rate does not apply to NRIs who do not have a permanent establishment in India.
According to Union Budget 2021, non-filers of income tax returns for the previous two fiscal years would be subjected to increased TDS and TCS rates if the tax deduction was Rs.50,000 or more in each of those two years.
