New Delhi: To help tax deducted at source (TDS) deductors and tax collected at source (TCS) collectors identify whether a taxpayer will be eligible to pay higher rate of taxes from July 1, the income tax department has said to have developed a new functionality on its tax portal. The finance ministry introduced a new section 206AB in the Budget 2021 to deduct TDS at higher rates for certain non-filers. If a taxpayer has not filed TDS in the last two years and aggregate of TDS exceeds Rs 50,000 in each year, the I-T department will charge more while filing the income tax returns (ITR) from July 1. The rate of TDS will be either twice the rate specified under the relevant section or provision or five per cent, whichever is higher.
“This can lead to extra compliance burden on such tax deductor or tax collector,” the Central Board of Direct Taxes (CBDT) said in a statement. To ease the burden, the regulator has issued a new functionality “Compliance check for Sections 206AB & 206CCA”. “The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response from the functionality if such deductee or collectee is a specified person,” the CBDT mentioned. This functionality is made available through reporting portal of the Income-tax department, it further added.
On Monday, the Central Board of Direct Taxes (CBDT) issued a circular on Monday on the implementation of Sections 206AB and 206CCA with respect to higher tax deduction/collection for certain non-filers.
“CBDT issues Circular No. 11 of 2021 dated 21.06.2021 on implementation of section 206AB & 206CCA wrt higher tax deduction/collection for certain non-filers. New functionality issued for compliance checks for sec 206AB & 206CCA to ease the compliance burden of tax deductors/collectors,” the income tax department tweeted.
CBDT issues Circular No. 11 of 2021 dt 21.06.2021 on implementation of section 206AB & 206CCA wrt higher tax deduction/collection for certain non-filers. New functionality issued for compliance checks for sec 206AB & 206CCA to ease compliance burden of tax deductors/collectors. pic.twitter.com/1DP39BKVZi
— Income Tax India (@IncomeTaxIndia) June 21, 2021
The CBDT said that since the TDS deductor or the TCS collector would be required to do due diligence on whether the deductee or collected is a ‘specified person’, this could lead to an extra compliance burden on them.
The new functionality — ‘Compliance check for sections 206AB and 206CCA’ — would ease this compliance burden, the CBDT said.
Through the functionality, the TDS deductor or TCS collector can feed PAN of the deductee or collectee on the functionality and get to know whether the deductee or collectee is a ‘specified person’.
The Budget 2021 had brought in a provision that mandated that non-filers of income tax returns for the past two fiscal years would be subjected to higher TDS and TCS rate if such tax deduction was ₹50,000 or more in each of those two years.