Applicability of New Sections w.e.f 1st July 2021

Section 194Q: TDS on purchase of goods

• Applicable to the Buyer whose Turnover/Gross Receipts in the preceding Financial year exceeds Rs.10 Cr. and aggregate amount of purchases from such particular buyer exceeds Rs.50L.
• TDS is required to be deducted @0.1% on the amount exceeding Rs.50L (The threshold limit of Rs.50L is to be reckoned from the beginning of the Financial year. i.e., 01.04.2021.)
• In the absence of PAN of the seller, TDS is required to e deducted @5%.

If TDS is required to be deducted u/s 194Q, then the provisions of section 206C(1H) will not prevail.

Section 206AB: Special provision for the deduction of TDS for Non filers of Income tax Return

• If any person is required is deduct the TDS under the provisions of Chapter XVIIB of the Income Tax Act except under the following sections:

1. 192 - TDS on Salary
2. 192A - TDS on Premature withdrawal form EPF
3. 194B - TDS on Lottery
4. 194BB - TDS on Horse riding
5. 194LBC - TDS on income from investment in securitization fund
6. 194N - TDS on cash withdrawals in excess of Rs.1 Cr

• And the transaction is carried out with the specified person(who has not filed the income tax return for the two immediate preceeding financial years and whose time period for filing the same has been lapsed (i.e., 2018-19 and 2019-20)
• Aggregate amount of TDS and TCS exceeds Rs.50000 in each of the financial year. Then,

• TDS is required to be deducted at the higher of the following:

1. Twice the rate specified in the relevant provisions of the Act
2. Twice the rate in force
3. 5%

For the purpose of this section, the Deductor will be required to take declaration regarding filing or non filing of Income Tax Return.

And the draft formats are enclosed below:

Format of Declaration for not imposing TDS Rate as per Section 206AB of the Income Tax Act, 1961

To Whom So Ever It May Concern

Declaration form for not imposing TDS Rate as per Sec. 206AB of the Income Tax Act

I/We, ________________, having Permanent Account Number ________________, am/are resident in India and hereby declare as follows:

Income Tax Returns for the below mentioned financial years have been duly filed by us within the prescribed time limit.

The copy of the ITR acknowledgment of the above mentioned years have been duly enclosed.

I/We hereby declare that I/we am/are duly authorized to give this declaration and the information stated above is true to the best of my/our knowledge .Further we would be responsible for any interest or penal consequence if the information furnished is found to be defective.

(Signature)

Name:
Designation:
Date:
Place:

This point is applicable only if a tax return has not been filed as stated above:

Format of Declaration for not imposing TDS Rate as per Section 206AB of the Income Tax Act, 1961

To Whom So Ever It May Concern

Declaration form for not imposing TDS Rate as per Sec. 206AB of the Income Tax Act

Where I/We have not filed my Return of Income for both the preceding two Financial Years 2019-20 and 2020-21, I/We hereby confirm that the aggregate tax deducted and tax collected at source is /is not Rs. 50,000/- or more in each of the two preceding Financial Years 2019-20 and 2020-21.

2. I/We hereby declare that I/we am/are duly authorized to give this declaration and the information stated above is true to the best of my/our knowledge .Further we would be responsible for any interest or penal consequence if the information furnished is found to be defective.

(Signature)

Name:
Designation:
Date:
Place: