Finance Minister Nirmala Sitharaman has tried to increase the number of taxpayers. That is why some changes have been made in the Finance Bill regarding Income Tax Compliance.
For this, more and more people file income tax returns, for this, Finance Minister Nirmala Sitharaman has provided many strict rules related to ITR. The Finance Minister has also added some provisions regarding Income Tax Compliance. He has added one such provision in section 206AB of Income Tax. Under this, now customers or payers may have to pay double TDS (tax deducted at source) as compared to normal rates. Let us tell you that soon after presenting the budget, the Finance Bill is introduced in the Lok Sabha. This bill contains detailed information about the implementation, removal, reduction, increase or other changes in rules proposed in the budget.
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What is new rule
According to the new rules, those who have not filed income tax returns, will be taxed more on the tax collection at source i.e. TCS.
These rates would be 10-20 percent, which was usually 5-10 percent. Sections 206AB and 206CCA have been added to the Income Tax Act to increase the scope of TDS and TCS.
Till now, the higher TDS rate was applicable only when taxpayers had not filed their PAN. Due to TDS rates, there has been an increase in cases of taking PAN card. Although a large number of people are still not filing their income tax returns.
Now what to say about tax experts
The trust registrar, partner of tax consultancy firm Nangia Anderson LLP, says that 206AB and 206CCA sections have been added to the Income Tax Act.
Till now, the rate of higher TDS was applicable only when taxpayers had not registered their PAN number.
However, due to TDS rates, the number of PAN cards has increased. But you are not filing income tax returns at that speed.
However, it is quite complex. The person who wants to cut TCS will probably not know that whose TCS is being deducted, he has paid the income tax or not.
If put in easy words, the man who has to repay TCS. He does not know. Because income tax is not filing tax return, then more TCS will have to be cut.
Applicable on all non-salary payments except in some cases.
The trust registrar states that the new provisions of section 206AB / section 206CCA will apply to all non-salary payments except in certain cases.
But these new provisions will not apply to TDS on lottery, horse riding, income from investment in Securities Trust or cash withdrawal from bank.
The impact of the new provisions brought through the budget is widespread because all contractors, freelancers, professionals, brokers, agents etc. will now need to show proof of filing ITR in earlier years, so that they can deduct TDS at normal rates.
If no such evidences can be shown, then the customers will have to pay TDS at a rate almost double the normal TDS rate (minimum 5%).
This will increase the burden for all taxpayers as they will have to raise the necessary avindes from their vendors that they have filed ITR in earlier years.
Most vendors do not want to share ITR information with their customers, in such a case, the vendor will either pay extra TDS or the customer will bear the burden.
Practically speaking, the burden of new provisions will fall on taxpayers. It is important to note here that if the NRI has any non-salary income from India, then the new provisions will not affect them.
