TDS / TCS at Higher Rates for Non-filers of IT-Return

1. Section 206AB

Applicability:

  • This shall be effective from 1st July’21
  • Specified person has not filed the ITR for 2 previous years and time limit for filing the return of income under section 139(1) has expired
  • Aggregate TDS is Rs 50,000 or more in each of the two previous years

Exception:

  • These sections are not applicable if TDS to be deducted u/s 192, 192A, 194B, 194BB, 194LBC or 194N of the Act
  • Provision is not applicable to a non-resident who does not have a permanent PE in India

Rate:

TDS: Higher of the Following Rates-

  • Twice the rate specified in the relevant provision of the Act
  • Twice the rate or rates in force
  • 5%
  • Example: A contract payment of Rs. 60L each is made by DXO Co Ltd to Mr. Sunil for two consecutive years and on which tax under section 194C at the rate of 1% was deducted and remitted by DXO Co Ltd. However, Mr. Sunil has not filed his return of income for both the years. In such case, once these facts are ascertained in 3rd year, the payer must deduct tax at source at the higher rates given above. Had PAN not been furnished, TDS rate would be 20%.

2. Section 206CCA

Applicability:

  • This shall be effective 1st July’21
  • Specified person has not filed the ITR for 2 previous years and time limit for filing the return of income under section 139(1) has expired
  • Aggregate TCS is Rs 50,000 or more in each of the two previous years

Exception:

  • These sections are not applicable if TDS to be deducted u/s 192, 192A, 194B, 194BB, 194LBC or 194N of the Act
  • Provision is not applicable to a non-resident who does not have a permanent PE in India

Rate:

TCS: Higher of the Following Rates-

    • Twice the rate specified in the relevant provision of the Act
    • 5%
Authored by – CA Anushka Saraogi

Compliances for March 2021

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