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Higher rate of TDS applicability

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Manoj Bhardwaj

66 Points Posted on 10 December 2022

Dear Experts,
Please advise how to identify contractors or vendors for higher TDS deduction and what are the criteria

Replies (3)

Quick Summary

From July 1st, 2021, new rules (Sections 206AB & 206CCA) mandate higher Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) for individuals who haven't filed Income Tax Returns for the past two financial years. This higher rate is double the specified rate or 5%, whichever is greater. The Income Tax Department has introduced a 'Compliance Check Functionality' to help businesses identify these specified persons, particularly subcontractors, and adhere to these new regulations.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121546 Points Posted on 10 December 2022

The tax rule relating to the TDS and TCS has come in to force from 01.07.2021 under which the the taxpayers who has not filed their Income Tax Returns for the past two Financial Years shall have to pay higher tax.

With the insertion of these sections namely Section 206AB and Section 206CCA w.e.f. 1st July 2021, it requires the specified persons to deduct TDS and TCS at a higher rates.

Tax Deducted at Source or Tax Collected at Source will be charged at double the rate specified in the relevant provision of the IT Act or 5 %, whichever higher.

To help the taxpayers of TDS and TCS to follow the Compliances of these sections, the IT Department has introduced a new “Compliance Check Functionality for Section 206AB and 206CCA”.
This functionality is already functioning through the reporting portal of the income tax department.