The Central Board of Direct Taxes (CBDT) not too long ago clarified that non-filers of Income Tax Return (ITR) must pay increased TDS in a single 12 months beneath Section 206AB, as an alternative of the sooner provision of two years. However, some non-filers have been exempted from paying increased TDS, even in case of digital digital belongings.
“… it has been provided that provisions of section 206AB will not apply in case of deduction of tax on transfer of virtual digital asset (VDA) under section 194S of the Act to a person being an individual or Hindu undivided family, whose sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such VDA is transferred or if such person does not have any income under the head ‘Profit and gains of business or profession’,” the CBDR mentioned in a current round.
Explaining the CBDT assertion, Dr Suresh Surana, Founder, RSM India, mentioned that crypto non-filers exempted from paying increased TDS are “specified persons” chargeable for withholding TDS beneath part 194S of the Income Tax Act.
The definition of ‘Specified person’ beneath part 206AB differs from mentioned definition beneath part 194S of the Income Tax Act.
Who is the required particular person beneath Section 194S?
For the aim of Section 194S of the IT Act, Specified Person means an individual being a person or HUF whose complete gross sales, gross receipts or turnover doesn’t exceed Rs 1 crore in case of enterprise and Rs 50 lakh in case of occupation through the monetary 12 months instantly previous the monetary 12 months or an individual being a person or HUF not having any earnings beneath the pinnacle Profits and positive aspects of enterprise and occupation.
“Finance Act 2022 introduced Section 194S of the IT Act, wherein any person responsible for paying to any resident any sum by way of consideration for transfer of a virtual digital asset is required to deduct TDS at the rate of 1% on such transfer of virtual digital asset to a resident for amount exceeding Rs.10,000. Further, in case where the payer is a specified person, the threshold limit is Rs. 50,000 and is not required to obtain TAN,” mentioned Dr Surana.
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He additional mentioned that as per Section 206AB(1) of the Income Tax Act, 1961, increased charge of TDS wouldn’t be imposed in following withholding instances:
- 192 – Salary
- 192A – Payment of gathered stability as a result of an worker
- 194B – Winnings from lottery or crossword puzzles
- 194BB – Winnings from horse race
- 194LBC – Income in respect of funding in securitization belief
- 194-IA – Payment on switch of sure immovable property apart from agricultural land.
- 194-IB – Payment of lease by sure people or Hindu undivided household.
- 194-M – Payment of sure sums by sure people or Hindu undivided household
- 194N – Cash withdrawals
In all of the above instances, the payee wouldn’t be subjected to increased TDS charge u/s 206AB of the Income Tax Act even when he’s a non-filer of return.
“Accordingly, the provisions of higher rate of tax deduction under section 206AB would not be applicable (even if the payee is a non-filer) in case where the payer is specified person responsible to withhold TDS u/s 194S. It is to be noted that the provisions of Section 194S would be made applicable only from 1st July 2022,” mentioned Dr Surana.
Source: www.financialexpress.com”