1 July 2021 Increased rates of TDS / TCS Rate of TDS / TCS for non-filers :- 206AB & 206CCA
A new category of persons whose TDS is to be deducted or TCS is to be collected with effect from July 1, 2021 , for whom TDS/TCS is not deducted from the normal rate and deducted at twice the regular rate or 5% , whichever is higher. will go.
Keep in mind here that TCS is not deducted but collected, but further in this article, wherever you have written “TCS to be deducted” for your convenience, read it to collect TCS.
This article is not only for those who have to deduct TDS/TCS but also for those who have to deduct TDS/TCS as he had to file returns to avoid excess TDS/TCS.
These provisions have been made for section 206 AB TDS and section 206 CCA for TCS of the Income Tax Act , so we will mention section 206AB in this entire article and since the same provisions have been given in section 206CCA, then you understand it yourself. Take it At the end of the article, we will remind you again, the only difference is that section 206AB is for increased rate of TDS and section 206CCA is for increased rate of TCS. With the implementation of both these sections from July 1, 2021, the responsibility of the persons deducting TDS and collecting TCS has also increased.
Let us first study this provision effective from 1st July 2021 and see how it affects the persons whose TDS/TCS is to be deducted and those who have to deduct TDS/TCS.
Let us see what the new section in the Income Tax Act says in this regard from July 1, 2021:-
Almost a similar provision is given in section 206 CCA , which you should see in the Income Tax Act because practically there is no need to give this section here.
Let us see that in the eyes of the government, the persons whose TDS / TCS is being deducted or collected for two consecutive previous years, whether it is related to any source or any person or persons who have been deducted or collected, If the amount of TDS / TCS is more than 50 thousand but even after that those person is not filing the return of these two years, then they are called “specified person” and TDS / TCS of these specified persons will be deducted at a rate higher than the normal rate. is .
It is to be remembered here that the amount of TDS and TCS in both the years mentioned in section 206 AB i.e. the amount of TDS and TCS in each year, wherever TCS / TCS is deducted or collected, the sum thereof is 50 thousand in every year. Should be more than Rs.
Now it was the department’s job to take action against them which happens even if the return is not filed, but now from July 1, 2021, the government has reduced the rate of TDS / TCS deducted on them to motivate or punish them in a way. The normal rate has been replaced by double the normal rate or 5%, whichever is higher. This means that if the rate of TDS under section 194C is 1% then the rate of TDS for these specified persons will be 5% similarly if the normal rate of TDS on purchase of goods is only 0.1% but if whose TDS is to be deducted If he is a “Special Person” under section 206AB, then the rate of TDS will become 5%, so imagine what will be the result of this.
Which two years do you want to see :-
Most important in this section are the two years for which we have to see the amount of TDS / TCS and whether the return has been filed or not. Let us see what we have to see in this stream? First of all, we have to see that for which years the returns and TDS / TCS are to be seen, that is, what will be the financial years about which we have to see that the person concerned comes under this section 206AB/206CCA.
This section has been brought in to encourage those taxpayers to file their returns for both the years even after the TDS/TCS has been deducted or collected in excess of a certain limit from different sources in two consecutive years. And these are here referred to as “Special Tax Payer” and now when a person deducts TDS/TCS from them, he/she will have to deduct this TDS/TCS at the rate of twice the prevailing rate or 5 percent whichever is higher.
What will be the effect on those who deduct TDS / TCS :-
More recently, on 21st June 2021, the Central Board of Direct Taxes – CBDT has issued a circular number 11, writing about issuing a utility in relation to this section, in this section 206 AB / section 206 CCA of specific persons. You will be able to get a list from the income tax portal by their PAN number and if the PAN number of a person comes in this list, then only you have to deduct TDS / TCS of that person at a rate higher than the normal rate. You can also check this utility by entering a pen number and by entering more than one pen, you can get a list of these Non-Filers who come under the category of “ Specified Persons” .
Let us once see the essence of this section 206 AB of Income Tax to see if anything is left out in the above study. How will the new category of these special persons, whose TDS/TCS is to be deducted at higher rate, be determined. The conditions given in section 206 AB /206 CCA for going in this category are as follows:-
1. TDS and TCS deducted/collected in each year during the year ended 31st March 2019 and 31st March 2020 was more than Rs.50 thousand.
Understand it in this way that X is a person whose TDS you have to deduct and the amount of TCS deducted or collected from his own various sources is more than Rs 50000.00 i.e. in the financial year 31/03/2019 also this amount is 50000.00 And in 31/03/2020 also this amount should be more than 50000.00. It means that if this amount is more than Rs. 50 thousand in both the years, then only this first condition of section 206 (C) (1H) will be fulfilled, only then the second condition of this section will have to be seen.
This is the first condition i.e. if this condition is satisfied then we have to look at the second condition .
- These taxpayers have not filed income tax returns for both these two years i.e. 31 March 2019 and 31 March 2020 i.e. that person has not filed returns for two consecutive years. Keep in mind that if the return of any one of these two years has also been filed, then you have to deduct TDS of that seller at the normal rate.
Let us in this provision, when will be related to the return of assessment year 2021-22 i.e. the year ending 31st March 2021, then remember that on the day the date prescribed under section 139(1) of this return expires then 31st March 2020 and The return for the year 31st March 2021 and the TDS/TCS deducted on these persons therein will determine the particular person and the year of 31st March 2019 will be omitted from this calculation at that point of time.
Now if we talk about the return for the year ended 31st March 2021, then till the date given in 139(1) of the filing of this return, then you do not have to think about the return of this year but when let’s say 30th November 2021 which is If the return is not filed till the due date of the audit returns, then the increased rate of TDS/TCS will be applicable from 1st December 2021 if this person has not filed the return for the financial year 19-20 but as soon as the assessee is in the financial year 2020- 21, which he will file after the due date, then again the normal rate of TDS will be applicable. The prescribed date of returns other than audit, whichever is given in section 139(1), that date shall come into force.
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