TCS/TDS for FY 2020-21 was Rs50,000 or more and missed to file ITR for FY2020-21? Then your income may be subject to deduction of TDS/TCS at higher rate. This is because Govt had introduced new rules in Budget 2021 for deduction of TDS/TCS of non-filers of Income tax return.

What is the new rule?

Section 206AB and Section 206CCA was inserted in the Income Tax Act w.e.f 1st July, 2021, stipulating special provisions for deduction/collection of tax at source for non-filers of income tax return.

For FY2021-22, if an individual has not filed ITR for FY2018-19 and FY2019-20 and TDS and TCS deducted in each year exceeded Rs 50,000, then higher rate of tax will be deducted from the specified income of taxpayer.

The above rule was amended in Budget 2022, making it more stringent. As per the amendment, if an individual has failed to file the ITR for FY20-21 and TDS deduction in FY20-21 exceeded Rs50,000, then higher TDS and TCS will be applicable to such individuals.

What is the applicable rate of tax?

TDS/TCS will be deducted at the higher rate of the following:

• Twice the rate specified in the relevant provision of the Act; or
• Twice the rate in force; or
• Rate of five percentage

What all income is exempted under the new rule?

Not all incomes are subject to the new rule. Income from salary, Provident fund, cash withdrawal from bank, winning from lotteries/horse races, etc are excluded from the rule.

How to check if you fall in the specified category?

The income tax portal has new feature for Compliance Check. List of persons falling under the specified category can be verified by entering the PAN. Portal provides for checking each PAN or Bulk upload. Once an individual file their ITR, their name will be removed from the list.