New TDS Rules: A new Tax Deducted at Source (TDS) rule has come into effect from July 1, 2021.
The Finance Act 2021 amended rules relating to tax deducted at source. The particular provision to tax non-filers of income tax returns for two years at higher rates was introduced in Budget 2021.
- Under the new rules, non-filer of income tax for past two financial years will be subjected to higher taxation.
- Such non-filers will have to bear higher tax deducted at source (TDS) and tax collected at source (TCS) if such tax deduction amounted to Rs 50,000 or more in each of the past two years.
- Provisions of this section will be applicable to TDS deductions on resident payments including shareholder dividends and service payment to vendors’ rent.
- However, it will not be applicable on salary, horse race, trust income, winnings from lottery or crossword, and cash withdrawals.
- A higher rate of TDS is also not applicable in the case of a non-resident Indian (NRI) who does not have any permanent establishment in India.
Who will enforce these rules?
- To enforce the rule, the Central Board of Direct Taxes (CBDT) has introduced a utility tool, known as the Compliance Check for Section 206AB & 206CCA.
- The toll will ease the compliance burden of tax deductions who will be able to use this functionality to identify non-filers.
- This functionality is already functioning on reporting portal of income tax department.
What are the benefits of this utility tool?
- The benefit of using this tool is that the Tax deductor would be able to conduct a single PAN (permanent account number) search or bulk search with the help of the Compliance check tool.
- For a single search, the deductor can get income tax return filing information about the specific person on the portal.
- This information can be downloaded in PDF format.
- Tax deductors can also get bulk searches involving multiple PANs.
- To enable this service, tax deductors & collectors would be required to check the functionality of the PAN of vendor from whom TDS is to be deducted.
- It is an acronym of the Central Board of Direct Taxes. CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.
- The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes. It functions as a division of the Ministry of Finance under the Department of Revenue.
- Its functions include formulation of policies, dealing with matters relating to levy and collection of direct taxes, and supervision of the functioning of the entire Income Tax Department.
- The CBDT is headed by a chairman and can have six members. All of these officers are in the rank of special secretary.