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These Taxpayers May Have to Pay Double TDS from Next Month : Income Tax Return

Starting from July, some taxpayers may need to pay Tax Deducted At Source (TDS) at higher rates. According to Finance Act 2021, if a taxpayer has not filed TDS within the last two years and TDS deducted annually exceeds of Rs 50,000, the tax department will charge more while filing the tax returns (ITR) from Dominion Day . In Budget 2021, a new section 206AB was introduced to deduct TDS at a higher rate on cases with certain nature of income. Where the return of income not filed for the previous two years and TDS deducted in annually exceeds Rs 50,000.

The rate of TDS are going to be higher of the below limits

a) Twice the speed specified under the relevant section/provision or

b) Twice the rate/rates in force or

c) Rate of five per cent

The Central Board of Direct Taxes (CBDT) has extended the deadlines to file tax returns for the fiscal year 2021. The last date of filing Tax Deducted at Source (TDS) for the fourth quarter of financial year 2020-21 has been extended to June 30, according to the circular. Earlier, the due of filing the TDS was May 31.

The tax Department has recently unveiled a replacement ITR e-filing portal for taxpayers. There will be a host of features available on the new website. Under new section 206AB, for specified persons who have not filed ITRs for last two years, a higher TDS has to be deducted by the payer. It is expected that for for deductor to check whether the deductee has filed its last two ITRs or not, the new tax portal is going to have a new facility.

In absence of such a facility, it's going to not be possible to implement the new Section 206AB. It is important to note that to check GSTR compliance the GST Portal already has this kind of feature. Now for ITR, the income tax portal is also expected to have this feature.

If a company pays a contractor A and it is liable to deduct 2% TDS on the payment to the contractor, it has to go and check on the portal whether A has filed its last 2 ITRs or not. If A has not filed last 2 ITRs and the total TDS deducted from A is more than Rs 50,000 then the company has to deduct 5% TDS instead.

The New Rule Won’t Be Applicable in These Cases

However, the newly implemented Section 206AB will not be applicable for TDS deducted under Section 192 for salary or withdrawal from Provident Funds under Section 192A. TDS on winning from the cardboard game, crossword, lottery, puzzle or the other games and race under Section 194B or 194BB won't come under the purview of latest section. It will not be applicable for TDS on cash withdrawal over Rs 1 crore under Section 194N and income against investment in the securitysation trust under Section 194LBC.

It must be noted that this TDS is prepaid tax. We should not misunderstand it as penalty or interest. While filing tax return, credit for this TDS done are often claimed that person.

Click Here : For Income tax return filling

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