Non-Filers of IT Return will have to Pay Double TDS

Wed, 19 May 2021 07:13:34 +0000

The Buyt Desk

A special provision of TDS(tax deducted at source) has been introduced in the Income Tax Act. According to the new TDS rule, you will have to pay more TDS.If you fail to show Income Tax returns of the previous two years and income is liable for TDS deduction of more than Rs. 50,000 in the last two preceding previous years then you will be liable to pay a much higher TDS than what is applicable. These new rules will be implemented from July 1, 2021 under sections 206AB and 206 CCA of Income Tax. If a payment is being made to a vendor in 2020-21, then the vendor must show proof of his IT income tax return for the last two financial years – 2018-19 and 2019-20. If he fails to do so, then whatever is the liability of TDS will have to be paid double or a flat rate of 5% will be levied -whichever will be higher.

This law is applicable to non-salaried individuals who earn income from interest, contract, dividend, rent, professional service or property deal. At the same time, it is mandatory for those people whose TDS liability is more than Rs 50,000.

The government wants to increase the number of income tax filers. In cases where just TDS of 1 or 2% was applicable people used to pay up the tax but would avoid filing IT return. But now they will have to file returns to avoid double TDS.

Earlier in the absence of a PAN card more TDS was deducted. Now non-filing of return will also increase the TDS liability.

The government’s goal is to increase the base of the taxpayer and it does not leave any gap in which people continue to work without filing returns. Those people who have not filed returns in FY 2018-19 and FY 2019-20 will have to face problems and now they will have to pay double TDS this financial year.

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6 Tax Changes due to New TCS and TDS Provisions

Fri, 23 Oct 2020 11:57:46 +0000

By CA Gauri Chadha

Tax collected at source ( TCS ) & Tax deducted at source(TDS) on the various transaction has changed from 1st October 2020. The New Finance Act 2020 widened the scope of these taxes covering foreign remittances, e-commerce, insurance and sale /purchases made of more than Rs 50 lakh. Let’s have a look as to how will this impact your wallet.

1. E-Commerce

To bring e-commerce into a structured tax net, the finance act has inserted a new section 194-O. An e-commerce entity will deduct 1% of TDS on gross sale of good and services or both which is facilitated through their digital or electronic mode of payment. In this case, the payment gateway will not be required to deduct tax under this section if the tax has been deducted by e-commerce operator on the same transaction.

2. Insurance Premium

Under the new section 194-O if there is no involvement of an insurance agent or aggregator in the transaction between an insurance company and the buyer, then there is no need to deduct TDS. However, the insurance company will have to cut TDS on commission payment if it is made to them in subsequent years.

3. Big purchases will attract a TCS of 0.1%

Another section 206C (1H) has also been inserted according to which any seller will collect 0.1 % of tax (0.75 till 31st March 2021) from the buyer if the sale consideration exceeds 50 lakh or if aggregate sale value exceeding Rs 50 lakhs in any previous year. This is applicable only if the turnover of the assessee is more than Rs 10 crores in the previous financial year. Moreover, such provision shall be applicable only for transactions made after 1st Oct. Eg if a seller receives 60 lakh before 1st October and 1 lakh after 1st October he will collect TCS on 1 lakh and not 11lakh.

4. On cars

Buying an expensive car would be a bit more expensive. If the cost of the car crosses Rs 10 lakh, then the buyer will have to pay a 1% TCS. If the sale is made to a dealer, then section 206C(IH) would apply, and the threshold will increase to Rs 50 lakh.

5. Tax on Foreign Fund transfer

If you are sending money abroad, then you should know that a foreign remittance exceeding Rs 7 lakh will attract a TCS of 5%. This could rise to 10% in cases where PAN or Aadhar is not available. In case of fees paid to a foreign college/institute through an education loan a reduced TDS of 0.5% will be charged .

6. Overseas Tour packages will be dearer

The seller of overseas tour packages will be now collecting a 5% tax on the total cost of the travel. There is no threshold limit on this so whether your tour package is of Rs 1 lakh or Rs 5 lakh you will have to shell out 5% more on the cost of the travel. TCS will not be applicable if you book your foreign travel yourself instead of going through a travel agency.

Exemption from 194-O

-Any individual or HUF who does not cross 5 lakh threshold and furnishes PAN /Aadhaar shall not come under the purview of this section.

-TCS provisions will not apply to transactions traded through recognized stock exchanges or cleared and settled by recognized clearing corporation.

-It would also not apply to transactions in electricity renewable energy certificates and energy-saving certificates traded through power exchanges.

It has been clarified by CBDT that no adjustment of sales return, discount, or GST will be made since the collection is made with reference to receipt of the amount of sale consideration.

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Non-Filers of IT Return will have to Pay Double TDS

The Buyt Desk

6 Tax Changes due to New TCS and TDS Provisions