The Union Budget 2021 has introduced new special provisions to the Income Tax Act, 1961. The new provision is expected to discourage the practice of not filing returns by the ‘specified person’ whose case has been deducted/collected. As per the new provision, a person in whose case TDS/TCS of Rs. 50,000 or more has been made for the past two years and who has defaulted to file return of income, the rate of TDS/TCS shall be deducted at the higher of the following rates:
It is also provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.
The provision shall not be applicable for the transactions where full amount of tax is required to be deducted.
The provisions will come into effect from 1st July 2021.
The penalty for late filing or Non filing of TDS statement is provided under section 271H. As per the section, where a person fails to file the statement of tax deducted/collected at source return on or before the due dates, then the assessing officer may direct such person to pay a penalty. The minimum penalty is Rs. 10,000 which can go up to Rs. 1,00,000. It should be noted that this penalty is in addition to late filing fees.
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