Know Where New TDS Rules Will Apply & Where Not From July 2021

The timeframe for filing income tax returns for the fiscal year 2021 has been extended by the Central Board of Direct Taxes (CBDT). According to the circular, the deadline for reporting Tax Deducted at Source (TDS) for the fourth quarter of the financial year 2020-21 has been revised until June 30. According to the Finance Act of 2021, non-filers of the Income Tax Return (ITR) would be subject to a higher Tax Deducted At Source (TDS) rate starting from next month.

Consequently, from July 1, if a taxpayer has not submitted TDS in the previous two years and the total TDS deducted each year surpasses Rs 50,000, the tax department would impose a higher penalty while submitting the ITR. A new section 206AB was implemented in the recent budget to impose a higher rate of TDS in circumstances where an income tax return was not submitted for the preceding two years and the TDS subtracted in each of those two years surpassed Rs 50,000.

You May Have To Pay Rs 10,000 As Penalty To The Income Tax Department In July, Here's Why

TDS will be higher than double the rate indicated in the relevant section of the Income Tax Act, or double the rates in effect, or at a rate of 5%. Furthermore, if tax is to be withheld on income earned from salary under section 192, lottery under section 194B, winning horse race under the section 194BB, income earned from PF under the section 192A, trust income under section 194LBC and cash withdrawals under the section 194N, the regulations of section 206AB would not apply.

Know All About New TDS Rules Applicable From July 2021

Furthermore, a higher TDS rate does not apply to NRIs or individuals who do not have a permanent establishment in India. Meanwhile, the Finance Act of 2021 proposed major changes to TDS requirements, including acquisitions of goods and higher TDS rates for ITR non-filers. New TDS rules for purchases of goods, as well as increased TDS rates for non-filers of ITRs, will take effect on July 1, 2021. The tax deduction at source on the payment of a predefined amount or sum for the acquisition of goods is regulated under Section 194Q, which was recently introduced.

From July 1 You May Have To Pay Higher TDS On Your Bank Or Post Office Deposits, Here's Why

Except in the event of a transaction specified under sub-section (1H) of Section 206C, the guidelines of Section 194P do 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. Taxpayers must also keep in mind that the timeframe for linking Aadhaar to PAN has been extended to June 30. PAN Card of the responsible taxpayers would be invalid if it is not linked within the stated deadline. Not only this, but they will also face penalties under the ITA for failing to quote the PAN, and double TDS of 20%.