22 Jul 2021, 12:37 — 3 min read
The income tax department has a new formula to calculate your tax liability from July 1 if you haven’t filed your income tax return (ITR).
According to the Finance Act 2021, if an individual has not submitted Income tax return for the previous two years and has an aggregate TDS/TCS Credit of Rs 50,000 or more in each year, he or she may require to pay TDS (tax deducted at source) at a higher rate from 1 July 2021.
The income tax department has stated on the official website that, “After section 206AA of the Income Tax Act, the Section 206 CCA shall be inserted with affect from the 1st day of July 2021.”
The rate of TCS collection is higher under the section 206 CCA or 5% of the rate stated in the relevant section.
The Section 206AB of Income Tax Act 1961 states that the new TDS Rates levied would be highest of:
The section 206AB now will not be used for TDS deductions for salaries (Section 192), Payment of accumulated balance due to an employee (Section 192A), Income gained from winning lottery or crossword puzzles (Section 194B), winning from racecourse (Section 194BB), income from the investment made in securitization trust (Section 194 LBC) and Cash withdrawals (Section 194N).
Section 206AB will not be applicable for Non-Resident deductee/collectee, who do not have permanent establishment in India.
TDS rates will be much higher than the current TDS Rates if Section 206AA (higher rates in case of no PAN) and section 206AB of the Act are applicable.
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Posted byParth Mishra
Helping SME's and Start-ups with Accounting, Compliance, Legal and Taxation