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Home / Money / Personal Finance /  New TDS rules from today: All you need to know

From today (July 1), non-filers of income tax returns for the past two fiscal years would be subjected to higher tax deducted at source (TDS) and tax collected at source (TCS) rate if such tax deduction was 50,000 or more in each of those two years.

To check such non-filers, CBDT has introduced a new utility tool 'Compliance Check for Section 206AB & 206CCA' to ease the compliance burden of the tax deductor. "To ease this compliance burden, the Central Board of Direct Taxes has issued a new functionality "Compliance Check for Sections 206AB & 206CCA". This functionality is already functioning through reporting portal of the income tax department (https://report.insight.gov.in)," CBDT said.

How will this new tool work?

Single PAN search: The tax deductor or collector can feed the single PAN (PAN search) of the deductee or coIIectee on the portal and can get a response from the functionality if such deductee or collectee is a 'specified person'. For PAN search, the response will be visible on the screen that can be downloaded in PDF format.

Bulk search: The tax deductor or collector can feed multiple PANs (bulk search) of the deductee or coIIectee on the portal and can get a response from the functionality. For bulk search, the response would be in the form of a downloadable file which can be kept for record, the CBDT added.

The TDS deductors and TCS collectors would be required to check on the functionality of the PAN of the vendor from whom TDS is to be deducted or TCS to be collected, only at the beginning of the financial year.

The tax department has prepared a list of taxpayers who did not file returns of income at the start of the financial year 2021-22, taking previous years 2018-19 and 2019-20 previous years.

The Central Board of Direct Taxes (CBDT) has recently extended various deadlines related to income tax to provide some relief in the wake of the second wave of Covid-19. Now taxpayers will have time till July 15 to file the TDS for the last quarter of the financial year 2020-21.

New TDS rule

The rate of TDS will be higher than the below limits

Double the rate specified in the relevant provision of the Income Tax Act or

Double the rate or rates in force or

At the rate of five per cent.

Where new TDS rule will not apply

"The provisions of this section will not be applicable if the total TDS deduction in each previous year is less than 50,000 or you are filing your income tax return regularly for the last 2 years," said Abhishek Soni.

Further, if TDS is to be deducted on salary income (192), lottery(194B), horse race (194BB), PF (192A), trust income(194LBC), and on cash withdrawals (194N), then the provisions of this section will not apply. Also, a higher rate of TDS is not applicable in the case of NRI who does not have any permanent establishment in India, he added.

The Budget 2021 had brought in a provision that mandated that non-filers of income tax returns for the past two fiscal years would be subjected to higher TDS and TCS rates if such tax deduction was 50,000 or more in each of those two years.


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