Analysis of TDS/TCS Provisions inserted through Finance Act, 2021

Like the previous year, this year also the Minister of Finance Smt. Nirmala Sitharaman has introduced new provisions to bring more transactions within the ambit of TDS (Tax Deducted at Source) just like the purchase of products. Further, to make the sure filing of return of income by the one that has suffered an inexpensive amount of TDS/TCS, the rate of deduction or collection of tax has been augmented for non-filers of reappearance of revenue. The Finance Act, 2021, has introduced the subsequent new provisions regarding deduction or collection of tax at source:

• TDS on purchase of products (Applicable from 01-07-2021); TDS on the income through pension of Senior citizens (Applicable from 01-04-2021);
• Higher rate of TDS or TCS just in case of non-filers of Income-tax Return (Applicable from 01-07-2021)

TDS on Purchase of products [Section 194Q]:

• A buyer shall deduct tax under this provision from the worth of products purchased by it if the subsequent conditions are satisfied:
• The total sales, gross receipts, or turnover of the business done by him exceeds 10 crores during the fiscal year immediately preceding the fiscal year during which he purchases the products,
• There is a sale of products from a resident person;
• Value or aggregate value of products purchased exceeds 50 lakhs in any previous year;
• The buyer shouldn't get on the list of persons excluded from the supply for deduction of tax; and
• No tax is deductible or collectible under the other provision except Section 206C(1H).
• Buyer shall deduct tax at the rate of 0.1% of the acquisition value exceeding 50 lakhs at the time of credit of such sum to the account of the vendor or at the period of imbursement thereof by any mode, either is earlier. The tax shall be deducted albeit the sum is credited to the ‘Suspense Account’.

TDS on income through pension of Senior citizens [Section 194P]:

Specified bank, being a depository financial institution notified by the Central Government, shall deduct tax under this provision if the subsequent conditions are satisfied by the deductee:

• He is a resident senior citizen;
• The age of the senior citizen in the previous year is 75 years or more than that;
• He receives pension income within the checking account maintained with the required bank;
• He doesn't have the other income except interest income received or receivable from any account maintained within the same specified bank during which he's receiving his pension income; and
• Such individual furnished a declaration to the required bank containing such particulars, in such form and verified in such manner, as could also be prescribed.
• Such a bank shall compute the entire income of the deductee after allowing deduction under Chapter VI-A and rebate under Section 87A and deduct tax thereon supported the rates effectively.

Further, if the specified bank deducts tax under this provision, the resident person shall not be susceptible to file his return of income for the assessment year relevant to the previous year during which tax has been deducted.

Higher rate of TDS or TCS just in case of non-filers of Income-tax Return [Section 206AB and Section 206CCA]:

Section 206AB provides for deduction of tax at higher rates if tax is deductible under any provision on any sum or income or the quantity paid, or payable or credited, by an individual to a specified person. However, this provision isn't applicable where tax is deductible under the subsequent provisions:

• Section 192: TDS on Salary;
• Section 192A: TDS on withdrawal from EPF;
• Section 194B: TDS on winning through the lotteries, crossword puzzles, etc.
• Section 194BB: TDS on winning from the racehorses;
• Section 194LBC: TDS on income in through some investment in Securitization Trust;
• Section 194N: TDS on cash withdrawal.

Specified person means a person:

Who has not filed the reappearance of revenue for together of the 2 valuation ages pertinent to the preceding years directly beforehand the preceding year throughout which tax is obligatory to be subtracted;

The adulthood to file such reappearance of revenue, as set under Section 139(1), has died; and

The aggregate amount of tax deducted and picked up at source is 50,000 or more than that in the previous year.

However, this provision isn't applicable for a non-resident who doesn't have a permanent establishment in India.

Deductor shall deduct tax under this provision at the upper of the subsequent rates:

• Double the rate laid out in the relevant provision of the Act;
• Twice the rates in force; or 5%.
• However, where both the supply of this section and Section 206AA are applicable, that is, the deductee has neither furnished his PAN to the deductor nor has he furnished his return of income for the required periods, the deductor shall deduct tax at the rates provided during this section or in section 206AA, whichever is higher.
• A similar Section 206CCA has been inserted to supply that the collector shall collect tax at a better rate if the collected doesn't file the return for the required period. The collector shall collect tax under this provision at the upper of the subsequent rates:
• Double the rate laid out in the relevant provision of the Act; or 5%.
• However, where both the supply of this section and Section 206CC are applicable, the collector shall collect tax at rates provided during this section or in section 206CC, whichever is higher.

Conclusion:

A cursory look at the proposals for tax deduction at source by the buyer in respect of the payments made to the supplier of goods besides the enhanced rate of TDS / TCS appropriate in the occasion of non supplying of ITRs for the directly previous two preceding ages show that the taxpayers not only must to do commercial, earn income and pay tax thereon but also have to work for the Government for creating some trail for tax collection by the exchequer without pains.

Footnotes :

https://www.incometaxindia.gov.in

https://taxguru.in

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or  Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Consulting & Governance shall not be responsible for any errors caused due to human error or otherwise.