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Know All About New TDS Rules From July 1, 2021

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The Finance Act of 2021 introduced some significant modifications to TDS standards such as purchases of goods, and higher TDS rates for non-filers of ITR. From July 1, 2021 new TDS norms for purchases of goods and higher TDS rates for non-filers of ITR will come into force. Section 194Q, which was recently added, is concerned with the tax deduction at source on the payment of a predefined amount for the acquisition of goods. The regulations of Section 194P shall not apply to a transaction on which tax is deductible under any provision of this Act and tax is collectable under the provisions of Section 206C, except in the case of a transaction defined under sub-section (1H) of Section 206C.

 

Know All About New TDS Rules From July 1, 2021

Sections 206AB and 206CCA make specific provisions for non-filers of income tax returns to subtract tax at source. With the insertion of new section 194Q for deduction of tax at source on payment of a certain sum for the purchase of goods, the Income Tax Department has stated on its website that "Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax."

For the considerations of this subsection, "buyer" implies an individual whose overall sales, net receipts or turnover from the business undertaken by him surpass ten crore rupees in the fiscal year immediately preceding the fiscal year in which the acquisition of goods is conducted. Where any amount referred to in sub-section (1) is credited to any account in the cashbook of the individual accountable to pay such income, either named as "suspense account" or by any other name, such credit of income shall be considered to be the credit of such income to the account of the payee, and the clauses of this section shall pertain accordingly, according to the Income Tax Department.

 

The other TDS provision applies to individuals who have not submitted ITRs in the two years before the year of TDS deduction. In such circumstances, the deductor of income should subtract tax at twice the appropriate rates for the applicable transactions or at 5%, whichever is higher. Taxpayers should also remember that the new deadline for linking Aadhaar to PAN is June 30. If it is not done on or before the deadline, the PAN will be considered inoperative, and the individual will be subject to penalties under the ITA for not quoting PAN, as well as higher TDS at a rate of 20%.

Read more about: tds
Story first published: Friday, June 18, 2021, 12:14 [IST]
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