Here we are discussing some important and new amendments that are made in the finance act 2021
An important note for TDS do assessees.
Here you know regarding section 206 AB Income Tax Act rules :
From 1-7-2021, an important provision in the IT Act will come into force. According to Sec206 AB, those of us who do TDS should check whether they have filed their IT returns in the last 2 years i.e. their IT returns for the financial years 2018-19 and 2019-20. Ordinary TDS rates apply if they file their IT returns. If they have not filed IT returns for two years, they will be eligible for the respective years as per their form 26AS.
a) If they have TDS + TCS less than Rs 50,000, normal TDS rates will apply to them.
b) When TDS + TCS exceeds Rs. 50,000 is deducted in their IT returns the following rules will be applicable.
Either two rates i.e, 5% or the existing rates, deduct accordingly.
For example, you now have to deduct 10% TDS on rent payment. If your homeowner does not file returns as mentioned above, he will have to deduct 20% TDS.
Similarly, we have to charge 5% TDS for any contract payment instead of the existing rate of 5%. According to 194Q we have to do 5% TDS instead of 0.1% on our purchases.
Similarly, these rules also apply to TCS provisions as per Sec206CCA. So when we need to collect 5% TCS on sales if the above rules are not satisfied. These rules do not apply to those whose IT returns are less than Rs 50,000 in the last 2 years.
So to find out if they have filed returns and if they have TDS beyond 50 thousand, it is advisable to take a declaration from the party.