For individuals who have failed to submit their income tax returns (ITR) for the last two years, the income tax department will apply a higher tax deduction at the source (TDS) rate starting from July 1. Sections 206AB and 206CCA of the Income-tax Act of 1961, which take effect on July 1, 2021, impose a higher TDS/TCS rate for "Specified Person" identified as "a person who has not filed the income tax returns or ITR for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years," according to the Notification No. 01 of 2021 of Central Board of Direct Taxes.
The Income Tax Department has devised a new "Compliance Check" feature for Section 206AB & 206CCAn to enable tax deductors/collectors to determine if an individual is a "Specified Person" as defined by Section 206AB & 206CCA. This feature is accessible at (https:llreport.insight.gov.in) of the Income-tax Department. According to the recent extensions made by the Central Board of Direct Taxes (CBDT), taxpayers now have until July 15 to submit their TDS for the fourth quarter of the fiscal year 2020-21. Only at the beginning of the financial year, TDS deductors and TCS collectors are mandated to confirm the functioning of the PAN of the vendor from whom TDS or TCS is to be deducted or collected.
TDS rates will be higher than double the rate stated in the pertinent provision of the Income Tax Act, or double the rate or rates in effect, or at a rate of 5%, according to the new TDS regulation. If your overall TDS deduction in the previous year was less than Rs 50,000, or if you have filed your income tax return actively for the past two years, the rules of this section will not pertain to you. Furthermore, where TDS is required to be withheld on salary income (192), lottery income (194B), horse race income (194BB), PF income (192A), trust income (194LBC), and cash withdrawals (194N), the regulations of this section do not pertain.
Furthermore, this new TDS rule will not apply to NRIs who do not have a permanent establishment in India. In order to reduce the compliance burden of the tax deductor or collector the CBDT has also said that "For any further assistance, Tax Deductors & Collectors can refer to Quick Reference Guide on Compliance Check for Section 206AS & 206CCA and Frequently Asked Questions (FAQ) available under "Resources' section of Reporting Portal. They can also navigate to the "Help" section of Reporting Portal for submitting a query or to get a call back from the Customer Care Team of the Income-tax Department. Customer Care Team of Income-tax Department can also be reached by calling on its Toll-Free number 1800 1034215 for any assistance."