There may be many taxpayers who are not filing Income Tax Returns even if the Tax Deduction at Source (TDS) or Tax collection at Source (TCS) is done on their transaction.
The Income Tax Department has evolved a mechanism to penalize all such taxpayers by providing higher rates of TDS and TCS. This has been done by adding 2 new provisions, Section 206AB and Section 206CCA in the Income Tax Act-1961 which has become effective from 1st July 2021,said renowned tax expert CA Naresh Jakotia while adressing a webinar on new TDS/TCS provisions organised by Jain International Trade Organisation (JITO)Nagpur.
He further said that not all the non-filers will be subject to higher rate of TDS/TCS but only those persons who meet the specified criteria for treating the person as non-filers will be penalised by higher rate of TDS/TCS.Non filers would be the persons who have has not furnished ITR for two previous years immediately preceding the year in which TDS or TCS is required to be done & the total amount of TDS/TCS is Rs 50,000 or more in each of the previous years.
It is essential that both the criteria need to be fulfilled simultaneously to be treated as “Non-Filers”. If the person has not filed the return in any one of the preceding two years but if the amount of TDS/TCS is not exceeding RS 50,000 in any of the preceding two years then higher rate will not be applicable,Jakotia added.He further said that the higher rate of TDS and TCS is applicable to all the categories of payment and not restricted to the newly Introduced provision related to purchase of goods u/s 194Q or sale of goods u/s 206C (1H).
Also Non-resident person who is not having a permanent establishment in India will not be treated as non-filers for above purpose & if the firm or company is newly incorporated, then it cannot be treated as non-filers in the first 2 financial years.Similarly, if any person has just attained the age of 18 years, he cannot be treated as non-filers in the first two financial years.In case the person is treated as non-filers as discussed above, then the deductor will be required to do TDS at higher of the following:twice the rate as specified under the relevant provisions or at the rates in force or @ 5%,Jakotia concluded.
The other speaker CA Pavan Khabiya expert on the subject deliberated on new provisions of registration of charitable institutions under IT Act.He said that Registration / Re registration of Charitable Trust has to be compulsorily done & added that Finance Bill 2020 has introduced the provisions of registration & re-registration of trust by introducing new section 12AB.
Every Trust/Institutions already registered under Sec 12A/12AA/10(23C)/80G needs to re-register on or before 31st August, 2021. The registration will be granted for five years. He explained the critical points that needs to be taken care while applying including documents required for registration. Detailed deliberation on the content of the application form, practical & important issues to be taken care while filling online application were also discussed.
The presentation ended with interactive question and answer session.Mentor Shri Ajay Sancheti congratulated Team JITO for a very nice & informative session. At the outset,CA Sudhir Surana,Secretary JITO made welcome remarks & said that JITO always take the initiative to update it’s members or society at large by organising such informative webinar which are beneficial for the stake-holders.CA Julfesh Shah,Treasurer & Prog Convenor said that the objective for higher TDS/TCS rate is to make the taxpayer file their ITR without fail.
This provision might be an additional burden on the deductor/ collector but may prove to be an additional step taken by the Government to catch people who do not file their ITRs even when their tax has been deducted / collected and is shown in Form 26AS.CA Himanshu Chordia introduced the speaker while CA Anand Ostwal,Convenor,JBF proposed vote of thanks.CA Ujwal Pagariya,CA Rajay Surana,Shri Rajan Dhaddha,Shri Manish Challany,Shri Shail Marothi,Shri Rajneesh Jain,Shri Atul Kotecha,Dheeraj Maroo,Shri Dewin Kothari,Siddhartha Runwal & large no of entrepreneurs, professionals & JITO members were present in the webinar.