Income Tax Deadlines Extended: These Taxpayers Still Must Pay Double TDS if Not Filed by June

The Central Board of Direct Taxes (CBDT) has recently extended various deadlines related to income tax to provide some relief in the wake of second wave of coronavirus outbreak. Now taxpayers will have time till July 15 to file the TDS for the last quarter of financial year 2020-21. However, there has been no changes in certain deadlines. Some taxpayers need to pay Tax Deducted at Source (TDS) at higher rates, starting from the next month. The Income Tax department had introduced a new Section 206AB in the Budget 2021 to deduct TDS at higher rates for certain non-filers. The rule will be applicable from July 1.

If a taxpayer has not filed TDS in the last two years and aggregate of TDS exceeds Rs 50,000 in each year, the Income Tax department will charge more while filing the income tax returns (ITR) from July 1. The rate of TDS will be either twice the rate specified under the relevant section or provision or five per cent, whichever is higher. To check whether a taxpayer will be eligible to pay TDS at higher rates from next month, the Income Tax department has recently launched a new functionality on the tax portal.

“It can be noted that applicability of section 206AB has not been extended further. Therefore, a higher rate of TDS or TCS will be applicable from July 1 2021 in cases of specific non-filers. The Income Tax department recently introduced a utility wherein compliance status of the person can be checked i.e. whether higher TDS is to be deducted or not,” said Abhishek Soni, co-founder and chief executive officer, Tax2win.in

To ease the burden of the tax collector or tax deductor who has to check whether a person is eligible to pay TDS at higher rate or not, the regulator has issued a new functionality “Compliance check for Sections 206AB & 206CCA”. “The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response from the functionality if such deductee or collectee is a specified person,” the CBDT mentioned. This functionality is made available through reporting portal of the Income Tax department, it further added.

For single PAN Search, the response will be visible on the screen. The tax department will allow the deductors to download the result in the PDF format. For bulk search of PAN details, the result will be available as downloadable file.

The tax department has prepared a list as on the start of the financial year 2021-22, taking previous years 2018-19 and 2019-20 previous years. The list contains name of taxpayers who did not file return of income for both assessment years 2019-20 and 2020-21 and have aggregate of TDS of Rs 50,000 or more in each of these two previous years. The tax department will not add any new names in the list during the financial year 2021-22. “This is a taxpayer friendly measure to reduce the burden on tax deductor a collector of checking PANs of non-specified person more than once during the financial year,” the regular said.

A fresh list will be prepared at the start of each financial year following all the norms mentioned by CBDT, the regulator said. The same process will be followed to prepare a list for Tax Collected at Sources (TCS). This feature will be made available only to Tax Deductors with a Valid TAN Number and not to all taxpayers.

Section 206AB will not be Applicable in These Cases

The newly implemented Section 206AB will not be applicable for TDS deducted under Section 192 for salary or withdrawal from Provident Funds under Section 192A. TDS on winning from the card game, crossword, lottery, puzzle or any other games and horse race under Section 194B or 194BB will not come under the purview of new section. It will not be applicable for TDS on cash withdrawal over Rs 1 crore under Section 194N and income against investment in the securitisation trust under Section 194LBC. “If you are deducting TDS on salary income (192), lottery (194B), horse race (194BB), PF (192A), trust income(194LBC), and cash withdrawals (194N), then provisions of this section will not apply. Also, the same is not applicable for NRI’s, who does not have any permanent establishment in India,” said Abhishek Soni.

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