If you have not filed income tax return for the Preceeding 2 financial years before 31st June, then payments made to you will be liable to be deducted at twice the previous rate. That is, you have only till 30th June to file income tax return of the Preceeding years. Preceeding year for the FY 2021-22 is 20-21 and 2019-20.Due date for filing returns for 2020-21 is extended and due date for filing belated return for the FY 2019-20 has expired on 31st May 2021.So if the assessee wants to file return for the FY 2019-20,he can do so only by filing application under 119(b).
However this provision is only applicable in case of Specified persons.
The Provision is as under:
Section 206AB and Section 206CCA of the Income-tax Act, 1961 have been introduced vide the Finance Act, 2021. Section 206AB mandates the person to deduct higher rates of TDS in case of non-filing of an income tax return by the specified person while Section 206CCA mandates the person to collect higher rates of TCS in case of non-filing of an income tax return by the specified person.
Meaning of Specified person:
– Person hasn’t filed ITR for the past two years
– Time limit for filing the ITR is expired under Sec 139(1)
– TDS of more than ₹50,000 was deducted in each of the past two years from that person.
It will be the deductor’s responsibility to ensure that the above-mentioned conditions are fulfilled.
In respect of section 206AB TDS shall be deducted on higher of below for any payment to Specified person –
– Twice the rates prescribed in the relevant provisions of the Income-tax Act
– 5 percent
– If the specified person does not furnish PAN, then TDS rate prescribed in section 206AA.
In respect of Section 206CCA, any person making payment to a specified person shall be liable to collect TCS at the higher of the following rates:
- Twice the specified rate as per relevant provisions of the Income Tax Act.
- At the rate of 5%.
However this section is not applicable for –
- Premature Withdrawal from EPF
- Winning from Lottery
- TDS on cash withdrawal above 1 Cr
So in order to avoid deduction at higher rates, non filers has to file their pending returns if they are covered under Specified persons.