As mentioned in the announcement of Union Budget 2021, a new rule has been introduced to deduct Tax Deducted At Source (TDS) at higher rates for non-filers by the Ministry of Finance.
From July, the taxpayers who belong to a certain category will have to pay TDS at higher rates.
The founder of Chartered Club of India Karan Batra said, “A clause states that higher TDS will be deducted if the total amount exceeds ₹50,000.” This applies to the taxpayers who have not filed an ITR (Income Tax Return) in the last two years while the total TDS amount exceeding ₹50,000 each year.
According to the Central Board of Direct Taxes (CBDT), the new rate of TDS will be either twice the rate mentioned for specific sections or a provision of five percent, whichever is higher.
To check whether a taxpayer has to pay higher TDS or not, the tax collector or simply tax deductor can check the persons’ liability for the payment of TDS at a higher rate starting from this month.
The CDBT continued, “The tax deductor or 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.” Moreover, the functionality is made available through Income Tax Department’s reporting portal.
A list has been prepared by the Tax Department as of the start of FY21-22, taking previous years of 18-19 and 19-20. The names of taxpayers who didn’t file an ITR for the assessment year 19-20 as well as 20-21 while having an aggregate of ₹50,000 TDS or more in each of these two previous years.
The Tax Department will prepare a new list at the beginning of each financial year (FY) following the rules by CDBT. No new names will be added in the last in the current FY.
Section 206AB, which is a newly implemented section, will not be applicable for TDS deducted (Section 192) for salary or withdrawal from Provident Funds (PF) under Section 192A.