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What is new rule for TDS? July 03 2021What is new rule for TDS?

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New Rule for TDS 

From July 1, a number of changes for bank account holders and taxpayers took effect. Non-filers of income tax returns for the previous two fiscal years will face a higher tax deducted at source (TDS) and tax collected at source (TCS) rate from July 1 if the tax deduction was Rs 50,000 or more in each of those two years.

The Central Board of Direct Taxes (CBDT) has released a new tool called "Compliance Check for Sections 206AB & 206CCA" to help with this compliance burden and help tax diductors keep track on non-filers. This feature is currently available through the income tax department's reporting site (," according to the CBDT.

How does this new tool function?

i) Single PAN search: A tax diductor or collector can enter the deductee's or collectee's single PAN (PAN search) into the portal and receive a response from the functionality whether the deductee or collectee is a specified person. The result of a PAN search will be displayed on the screen and can be downloaded in PDF format.

Bulk search: The tax deductor or collector can submit several PANs (bulk search) of the deductee or coIIectee to the portal and obtain a result. The CBDT noted that the response for bulk searches would be in the form of a downloaded file that could be saved for future reference.

Only at the start of the financial year will TDS deductors and TCS collectors be needed to validate the functionality of the PAN of the vendor from whom TDS or TCS is to be deducted or collected.

The tax department has compiled a list of taxpayers who did not file income tax returns at the start of the fiscal year 2021-22, based on the previous fiscal years 2018-19 and 2019-20.

Following the second wave of Covid-19, CBDT recently extended certain income tax dates to provide some assistance. Taxpayers now have until July 15 to register their TDS for the final quarter of fiscal year 2020-21.

New TDS rules 

TDS rates will be higher than below limits.

Double the rate set forth in the relevant provision of the Income Tax Act or.

Double the rates in force or rate,

At a rate of 5% per year.

Where does the new TDS rules do not apply?

The provisions of this section will not apply if your total TDS deduction in each prior year was less than Rs 50,000 or if you have filed your income tax return on a regular basis for the previous two years.

Furthermore, if TDS is to be deducted on salary income (192), lottery income (194B), horse race income (194BB), PF income (192A), trust income (194LBC), and cash withdrawals (194N), the rules of this section are not applicable. Furthermore, a higher TDS rate does not apply to NRIs who do not have a permanent establishment in India.

According to Budget 2021, non-filers of income tax returns for the past two fiscal years will face higher TDS and TCS rates if the tax deduction was Rs 50,000 or more in each of those two years.

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