Rules mandate tax deduction at a higher rate in case I-T returns are not filed by specified persons.
The Finance Act 2021 amended rules relating to tax deducted at source come into effect from July 1. These rules mandate tax deduction or tax collection at a higher rate in case the income tax returns are not filed by certain specified persons.
New provisions introduced in the Union budget 2021-22 come into effect from July 1. as per the new provision the tax deductor/collector is required to check if the income earner has filed the returns for the previous two years if the amount of TDS deducted is ₹50,000 or more.
The new income tax portal has provided the facility to check by entering the PAN numbers. If the returns have not been filed, then the TDS deducted will be double the existing TDS rate or at rate of 5%, whichever is higher.
Does the new TDS norm apply to all categories?
No. Salary income, provident fund payments, TDS on lottery and horse racing have been excluded.
Since it kicks in from July 1, returns of which year would be checked?
Since the norms are effective from July 1, the previous financial years of 2018-19 and 2019-20 will be considered for checking the return filing for the transactions in current financial year 2021-22.
As a taxpayer, why should I be concerned about these new TDS norms?
The new provision will play a key role in making society more tax compliant and will also facilitate businesses in checking the compliance in a very easy manner. Hence, taxpayers are advised to regularly file the return of income every year to avoid extra tax through the increased rates of TDS in the new provisions.
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