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Saturday, September 24, 2022

Pay Extra TDS/TCS From July 1, If You Haven’t Done This (New Income Tax Rules)

For taxpayers, who have not filed ITR (Income Tax Returns) till-date, it is high time to do so since if you do it after July 1, it will attract a higher TDS/TCS rate, 2021.

Why Would This Happen?

To ensure that every assessee reports correct income, the Finance Act has revamped the scope of tax collection from the exact origin.

So immediately, from July 1, a person will be obligated to pay extra TDS. Person must pay extra TDS at a higher rate if he/she misses filing their ITR/Income Tax Returns toward the last two years and has aggregate TDS/TCS credit of Rs. Fifty thousand or more in all of the two years.

New Income Tax Law

As per Section 206AB of the Income Tax Act 1961, the new TDS rate levied would be the highest of the below scenarios.

  1. Double the rate specified in the relevant prerequisite of the Income Tax Act or
  2. Double the rate of rates in force or
  3. At the rate of five percent.

At the same time, for TCS collection, the rate under section 206 CCA of the Act will be higher.

It will be double the rate specified in the relevant section or 5 percent.

Exceptions For New Rules

206AB Section of the Act will not be helpful for TDS deduction under sections 192 (Person Salary); 192A (Adjustment of accumulated balance due to an employee); 194B (Winnings from lottery or crossword puzzles); 194BB (Winnings from horse competition); 194LBC (Income from investment in securitization trust); and 194N (Cash withdrawals).

It will also not apply to non-resident deductee/collected, who doesn’t have a permanent establishment in India.

If both Income Tax section 206AA (higher TDS rate in case of no PAN) and section 206AB of the Act is applicable, the TDS rate will be much higher than the TDS rates sections described above.

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