From July 1, a higher Tax Deducted At Source (TDS) rate will be applicable for taxpayers who failed to file the Income Tax Return (ITR). If a taxpayer has not filed TDS in the last two years and TDS deducted each year exceeds Rs 50,000, the department will charge more while filing the ITR.
During Budget 2021, a new section 206AB was introduced to deduct TDS at a higher rate in cases with certain nature of income. According to it, if a TDS of Rs 50,000 or more has been made for the past two years but no return of income has been filed, the rate of TDS will be double the specified rate or 5 percent, whichever is higher.
This provision will, however, not be applicable for the transactions where the full amount of tax is required to be deducted e.g. salary income, payment to a non-resident, lottery, etc.
The Central Board of Direct Taxes (CBDT) had earlier extended the deadline to file the ITR for the financial year 2021 to June 30.
According to a PTI report, the income tax department on Monday said it has developed a new utility to help TDS deductors identify the ‘specified persons’ on whom a higher rate of tax would be levied from July 1.
The Central Board of Direct Taxes (CBDT) issued a circular on Monday on the implementation of Sections 206AB for a higher tax deduction for certain non-filers.
The CBDT said that since the TDS deductor would be required to do due diligence on whether the deductee is a ’specified person’, this could lead to an extra compliance burden on them. The new functionality — ‘Compliance check for sections 206AB’ — would ease this compliance burden, the CBDT said.
Through the functionality, the TDS deductor can feed PAN of the deductee on the functionality and get to know whether the deductee is a ‘specified person’.
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