As more and more people file income tax returns (ITR), a provision of strict rules has been made in the budget 2021 for those who do not finance income tax returns. If you have not filed your income tax return, then be ready to pay more TDS (Tax Deduction at Source-TDS). This TDS can be doubled already. According to the new rules, tax collection at source (TCS-TCS) will be higher on those who have not filed income tax returns. According to the new rules, from 1 July 2021, the Penal TDS and TCL rates will be 10–20 per cent, which is usually 5–10 per cent.
The Finance Minister has added sections 206AB and 206CCA to the Income Tax Act to expand the scope of TDS and TCS. Till now, the rate of higher TDS was applicable only when taxpayers had not registered their PAN number. KPB & Associates partner Paras Savla said that the government has understood that there has been an increase in cases of taking PAN cards due to the increased TDS rates on non-PAN holders. But, more people are still not filing their income tax returns.
This is trouble
But, there is a complexity in this. The entity that wants to deduct TCS may not know whether the TCS being deducted has paid the income tax or not. For example, a tenant will deduct TCS while paying rent to his landlord. According to Budget 2021, if the landlord is not filing his income tax return, the tenant will now have to deduct more TCS.
But the question is, how will the tenant know whether the landlord has filed a tax return or not? To this, KPB & Associates partner Paras Savla said that banks have many ways to verify income tax records and have access to this system. However, it will be difficult for a general person or small units to verify whether a person has filed a tax return or not.
Will people ask for a copy of IT return
Paras Sawla said that now it has to be seen whether people will also be asked for a copy of their income tax return. We see that many people are often forced to give PAN card copies for various financial and non-financial transactions. However, in Finance Bill 2021-22, it has been recorded that premature (pre-decided) provident fund withdrawals, winnings in lotteries and horse racing, cash withdrawals of over Rs 1 crore and securitization trusts get an exemption from higher tax collection rates Will be. The reason for this is that they already have very high tax rates. For those not filing ITR in all other areas, the rate of TDS and TCS can be doubled to 5 per cent or fixed rate, whichever is higher.
Will this decision of RBI increase the returns on FDs? Know which bank is getting more interest now
