BlogTCSTDSKey TDS/TCS Changes applicable w.e.f. 01st July 2021

June 17, 2021by KNM
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The Finance Bill, 2021 takes the same recourse by inserting Section 194Q, Section 206AB, and Section 206CCA.

Section 194Q: Earlier Govt. has proposed and implemented 206C(1H) on the sale of goods. Now similar provision is applicable from 01st July 2021, that ’buyer’ being a responsible person for paying any sum to any resident seller for the purchase of goods is liable to deduct TDS @0.1% (if PAN not available then 5%)

Section 206AB & 206CCA: We have already well versed with Section 206AA of the Act which provides for the higher rate of TDS for non-furnishing of PAN. Similarly, section 206CC of the Act provides for the higher rate of TCS for non-furnishing of PAN. Now similar provision has been inserted by Finance Act 2021, w.e.f. 01st July 2021. As per new section 206AB as a special provision for providing a higher rate of TDS and also a new section 206CCA for providing a higher rate of TCS for non-filers of ITRs.

For more details, kindly refer to the below table for quick reference of newly inserted sections:-

Particulars TDS U/s 194Q- TDS on Purchase of Goods   TDS U/s 206AB- Higher rate of TDS for Non-filler of ITR TCS u/s 206CCA- Higher rate of TCS for Non-filler of ITR
 

Effective From

 

01st July 2021

 

01st July 2021

 

 

Applicable to

 
 
 
 

Buyer whose total sales, gross receipts or turnover from the business carried on by him exceed INR 10 Crore during the financial year immediately preceding the financial year

And

Buyer is liable to pay the value or aggregate of such value exceeding INR 50 Lakh in the previous year to seller.

 

 

Specified Person, as below:

Any person who has not filed tax return for 2 preceding assessment years and time limit for filing the original return has expired;

And

Aggregate of TDS or TCS (As the case may be) is INR 50,000/- or more in each of the preceding 2 assessment years.

 

 

Rate

0.1%

of payment / credit to seller whichever is earlier,

on the amount in excess of INR 50Lakh

   

Higher of:

  • Twice the rate specified in the relevant provision of the Act; or
  • Twice the rate rates in force; or
  • 5%
Higher of:

  • Twice the rate specified in the relevant provision of the Act; or
  • 5%
 

Exceptions

 

  • a transaction on which tax is deductible under any provision of the Act;
  • a transaction, on which tax is collectible under the provisions of section 206C**;
  • Seller is Non-Resident

 

 

 

  • Where payments is subject to TDS deduction under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act

 

  • Where the non-resident does not have a PE in India
 

  • Where the non-resident does not have a PE in India
Non-Furnishing of PAN/ITR

 

 

Where existing provisions of section 206AA/206CC (i.e. non-furnishing of PAN) of the Income Tax Act are applicable, then TDS / TCS shall be deducted/collected at:

In case of TDS:

Rates specified in section 206AA or 206AB, whichever is higher

In case of TCS:

Rates specified in section 206CC or 206CCA, whichever is higher.

** Where a particular transaction is covered by Section 194Q as well as section 206C(1H) (i.e. TCS on sale of goods), then TDS under section 194Q shall apply.

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The article has been contributed by

CA Kavita Arora
Sr. Manager-Tax

 

Further, we shall be happy to assist in case of any clarifications. For a deeper discussion, feel free to revert us at services@knmindia.com

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication.

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