Filed Income Tax Return? TDS rules to change from THIS month

The finance ministry has come up with a new rule to cut Tax Deducted At Source (TDS) at higher rates for non-filers. By non-filers, we mean those taxpayers who didn’t bother to file an income tax return (ITR) in the last two years, and the total amount TDS goes beyond Rs 50,000 each year. They will be forced to pay TDS at a much higher rate from July.

New TDS Rate

The new TDS rate will be either twice the rate mentioned under the relevant section or provision or five percent, whichever is higher, the Central Board of Direct Taxes (CBDT) said.

In order to check whether a taxpayer is eligible to pay higher TDS, the income tax regulator has come up with a new functionality “Compliance check for Sections 206AB & 206CCA" to ease the burden on the tax deductors.

How will it Work?

“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 there via the reporting portal of the Income-tax department, it further added.

If you search it with the help of PAN, then a response will be added on the screen. The tax department will also let the deductors download the result in PDF format. For a bulk search of PAN details, the result will be available as a downloadable file.

In order to identify the non-filers of ITR, the tax department has made a list of these people at the start of the financial year 2021-22, which includes previous years 2018-19 and 2019-20. This particular list includes the names of taxpayers who did not file returns of income for both assessment years 2019-20 and 2020-21 and have an aggregate TDS of Rs 50,000 or more in each of these two previous years.

 For the year, 2021-22, a new list will be created and this will be a standard norm for each and every year. “The deductor or the collector may check the PAN in the functionality at the beginning of the financial year and then he is not required to check the PAN of a non-specified person during that financial year," said CBDT.