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Missed ITR Filing for AY 2021-22, Be Ready for Higher TDS

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By Arpit Kulshrestha
Pay Higher TDS If You Missed ITR Filing

A higher TDS shall be subjected to apply for the assessee who fails to furnish the ITR for the former year.  The same higher TDS shall be applied to specific incomes which will be earned in the present fiscal year by the assessee who loses to furnish the Income-tax return for 2020-21 (AY 2021-22).

The government has announced the revisions in the union budget where it revises the laws beneath sections 206AB and 206CCA that imposes much more TDS. The new laws will come into effect on April 1, 2022. The last date to furnish the original ITR for FY 2020-21 was December 31, 2021. Hence when the assessee losses to furnish their ITR by the mentioned date shall be liable to pay the higher TDS in FY 2022-23. 

"The CBDT circular has been issued to determine the non-filers who are subject to higher tax withholding or collection. This circular is going to help the taxpayers in determining the non-filers and remove difficulties in interpretation of the compliance provisions," told a tax expert.

As per the new laws, the higher TDS applied to the persons when they fulfil the below-mentioned conditions:

  1. Income tax return not furnished for the related former fiscal year immediately preceding the fiscal year where the tax needed to be deducted or collected. 
  2. Aggregate TDS and TCS is more than Rs 50,000 in that former year.

What is the Way to Perform It?

To find out whether the higher TDS shall be imposed on a person or not in the current Financial year (FY 2022-23), the banks shall need to find out whether a person has furnished the income tax return or not for the former fiscal year. Moreover, the banks shall be required to check if the total TDS and TCS in the former year is more than Rs 50,000.

If these conditions meet then the assessee shall be needed to file a higher TDS.  

The incomes on which much more TDS shall not be imposed. 

An individual is needed to pay much more TDS on all his income which he earned in FY 2022-23. These are described as:
  • 192: Salaries
  • 192A: Withdrawal from PF account
  • 194B: Income by the way of winnings from the lottery, Game shows & puzzles etc.
  • 194BB: Income from winnings from horse race
  • 194LBC: Income in respect of investment in securitization trust
  • 194N: Cash withdrawal in a financial year exceeding a specified financial year
  • 194-IA: Money received from the sale of immovable property
  • 194-IB: Rent paid exceeds Rs 50,000 per month
  • 194M: Payments of certain sums by individuals & HUFs to resident contractors or professionals.
  • 194S: TDS towards the transfer of virtual digital assets (VDA) like crypto-assets and others provided sales, gross receipts, or turnover from the business held by him or profession practised by him is not more than 1 cr (for a business) or Rs 50 lakh (in case of profession). This section will come into force from July 1, 2022.
A much higher TDS will be applicable on the additional incomes like dividends obtained from the shares and mutual funds, interest obtained from the fixed deposits, recurring deposits, interest obtained through the small savings scheme wherever subjected to apply, and others. 

Under the income tax compliance, a much higher TDS or TCS gets deducted at the rate, highest of the below on particular individual:

(a) Twice the rate specified in the relevant provision of the Act; or
(b) Twice the rate or rates in force; or
(c) The rate of five per cent.

What Method Do Banks Choose if the Higher TDS is Needed to be Deducted?

A list of these people on whom the higher TDS is applied in FY 2022-23 would be made mentioning the FY 2020-21 as a related fiscal year, as per the CBDT circular. The same specified the name of the persons who would not furnish Income-tax return in AY 2021-22 and their aggregate TDS and TCS in the FY 2020-21 is more than Rs 50,000 limit.

There is no addition of the new names to the above-mentioned list. Also when the mentioned person furnishes the valid ITR (filed and verified) towards the FY 2021-22 (AY 2022-23), their name shall be eliminated from the list post to the expiry of the last date of furnishing the income-tax return or actual date of filing the valid income tax return, whichever is later. 

When the aggregate TDS and TCS do not exceed the Rs 50000 threshold in the former fiscal year then the person's name shall get cut from the list on July 31, 2022.

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