Starting July 1, non-filers of income tax returns for the past two fiscal years will be subjected to higher tax deducted at source (TDS) and tax collected at source (TCS). This will only be done if the tax deduction was Rs 50,000 or more in each of those two years.

What are the new TDS rule:

– The TDS rate will be higher than the below limits

– Double the rate specified in the relevant provision of the Income Tax Act

or

-Double the rate or rates in force

or

– At the rate of 5%.

Where will the new TDS rule not apply?

If the total TDS deduction in each previous year is less than Rs 50,000, the TDS rule will not apply. Also, if you are filing your income tax return regularly for the last 2 years, the TDS rule will not apply.

Also, if TDS is to be deducted on salary income, lottery, among others, then the new rules will not apply.

Further, a higher rate of TDS will not be applicable if an NRI does not have any permanent establishment in India.

2021 Budget announced a mandate that non-filers of income tax returns for the past two fiscal years would be subjected to higher TDS and TCS rates.

Recently, the Central Board of Direct Taxes (CBDT) extended deadlines related to income tax to give some relief in view of the second COVID-19 wave.

Taxpayers will have time till July 15 to file the TDS for the last quarter for 2020-21.