Missed the RTI filing last year? You may be required to pay higher TDS this fiscal year

Photo: BCCL

In case you haven’t filed ITR for fiscal year 2020-21 (Assessment year 2021-22), you may end up paying higher TDS on certain income earned in the current fiscal year (2022-23). In the Union Budget, the Government announced changes to the provisions of Sections 206AB and 206CCA which levy higher TDS on specified persons. The amended rules come into effect on April 1, 2022.

The Central Board of Direct Taxes (CBDT) introduced Sections 206AB and 206CCA of the Finance Act 2021, which were incorporated into the Income Tax Act 1961, effective July 1, 2021.

Who is a definite person?

A “specified person” is a person who has not filed an ITR for the tax year immediately preceding the fiscal year in which tax is to be withheld, for whom the deadline for filing an income tax return is expired and in which case the total of the tax withheld at source and the tax collected at source during the said preceding year is Rs 50,000 or more.

The deadline to file an original ITR for fiscal year 2020-2021 was December 31, 2021. If you have not filed your ITR by this deadline, you will be subject to the higher TDS amount in fiscal year 2022 -23.

Tax rate that will be applicable to specified persons

In accordance with income tax laws, the highest TDS/TCS will be deducted at the highest rate of the following for the specified persons:

1) Twice the rate specified in the relevant provision of the Act; Where

2) Twice the current rate(s); Where

3) The rate of five percent.

How will banks check if higher TDS should be deducted?

The IT department, via a notification on June 9, 2022, released a compliance check feature for Sections 206AB and 206CCA to help tax deducers/collectors such as banks determine whether a person is a “specified person” such as defined by Sections 206AB and 206CCA. This capability is provided by the Department of Income Tax (https:/lreport.insight.gov.in).

To determine if a larger TDS is needed, a bank or other financial institution can use the Department of Income Tax’s “Conformance Check for Section 206AB & 206CCA”. To determine whether the individual concerned is a specific person for whom a higher TDS is applicable, the tax deductible will have to enter a single PAN or several PANs.

On the Compliance Check for Section 206A8 & 206CCA page, click the -PAN Search tab to access the PAN Search mode features. In this mode, only one valid PAN and captcha can be submitted at a time, and the output will include the fields below.

Fiscal Year: Current Fiscal Year

• PAN: As indicated in the entry.

• Name: masked name of the person (according to the PAN).

• Date of attribution of the PAN: Date of attribution of the PAN.

• PAN·Aadhaar Link Status: PAN-Aadhaar link status for individual PAN holders as of the date. Response options are Linked (PAN and Aadhaar are linked), Unlinked (PAN and Aadhaar are not linked), Exempt (PAN is exempt from PAN-Aadhaar linking requirements as per Department of Revenue Notice No. 37/ 2017 of May 11, 2017) or not applicable (the PAN belongs to a non-individual person).

Person Specified under 206AB and 206CCA: Response options are Yes (PAN is a Specified Person pursuant to Section 206ABI206CCA as of the date) or No (PAN is not a Specified Person pursuant to Section 206ABl206CCA as of the date) .

In addition, the date on which “specified person status” as defined by Sections 206AB and 206CCA is determined will also be included in the output.

Click here to read the full CBDT notification.