Income tax return: Non-ITR filers? Be ready to face higher TDS

If you are among those individuals who have not filed the income tax return (ITR) for financial year 2020-21, then you will be on the list of non-tax filers and have to face higher tax deduction at source (TDS) from this financial fear. The Central Board of Direct Taxes (CBDT) has issued a circular regarding use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961 to determine the non-filers who are subject to higher TDS from 1 April 2022.

According to the circular the specified persons are

1) He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted/collected. Two previous years to be counted are required to be those whose return filing date under sub-section ( I) of section 139 has expired.

2) Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.

During the financial year 2022-23, no new names are added in the list of specified persons.

“This is a taxpayer friendly measure to reduce the burden on tax deductor and collector of checking PANs of non-specified person more than once during the financial year,” the circular said.

If any specified person files a valid return of income (filed & verified) for the assessment year 2021-22 during the financial year 2022-23, his name would be removed from the list of specified persons. This would be done on the date of filing of the valid return of income during the financial year 2022-23 .

Also the provisions of section 206AB will not apply in case of deduction of tax on transfer of virtual digital asset (YDA) under section 1945 of the Act to a person being an individual or Hindu undivided family, whose sales, gross receipts or turnover from the business carried on by him or profession exercised by him does not exceed one crore rupees in case of business or fifty lakh rupees in case of profession, during the financial year immediately preceding the financial year in which such YDA is transferred or if such person does not have any income under the head “Profit and gains of business or profession.”

What is section 206AB and 206CCA

Section 206AB provides TDS at rates higher than those prescribed in the Act while making payments or collections to those who have not filed their income tax return.

Similarly, section 206CCA provides a collection of tax at source (TCS) on amounts received from the buyers at rates higher than specified in the Act.

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