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.
