Higher TDS from today (01st July 2021) – All you need to know – simplified

Higher TDS from today (01st July 2021) – All you need to know – simplified

What is 194Q?
If your total turnover has exceeded Rs.10 crores in FY 2020-21, you need to deduct TDS @ 1% on all purchases made if it exceeds Rs.50 lakhs from a single party.
 
What is 206(1H)?
If your total turnover has exceeded Rs.10 crores in FY 2020-21, you need to charge TCS @ 1% on all sales made if it exceeds Rs.50 lakhs to a single party.
 
Whether 194Q or 206(1H)?
It is Either or Or. If the purchaser is deducting u/s 194Q, then you need not charge u/s 206(1H). But primary responsibility is on the seller.
 
What is 206AB?
If you are deducting TDS under any section for services obtained from any party, if that party is a specified party, then TDS shall be @ 5% or double the existing rate, whichever is higher.
 
What is 206CCA?
If you are charging TCS under any section for sales to any party, if that party is a specified party, then TCS shall be @ 5% or double the existing rate, whichever is higher.  
 
Who are specified parties?
A specified party is one who falls under the following conditions:
Condition A: Has he filed his IT returns for the last two financial years for which due date is over (FY 2018-19 and FY 2019-20)?
a) If yes, then non-specified party
b) If no, then check Condition – B
Condition B: Does his aggregate TDS from all sources exceeding Rs.50000/-
a) If no, then non-specified party
b) If yes, then specified party
 
How to know if supplier is a specified party?
Tax deductors / Tax collectors have to register with a utility provided by the Income Tax department under the reporting portal with their TAN. Once registered, they can check with the PAN of their suppliers.
 
From when are these new rates of TDS or TCS applicable?
These new sections will be applicable on any payments made or bills booked w.e.f. 01/07/2021
 
Is higher TDS deduction u/s 206AB not applicable to anyone?
The new section 206AB is not applicable to the following kinds of deductees, where the normal rate will continue to apply:
a) TDS on salary u/s 192
b) TDS on lottery, puzzle, any games, horse racing u/s 194B
c) Withdrawal from PF u/s 192A
d) Income against investment in securitisation trust u/s 194LBC
e) Cash withdrawal over Rs.1 crore u/s 194N
 
What about payment to NRIs?
The new section will also not be applicable for payments made to NRIs u/s 195 where the rates specified under the act will continue to apply.
 
Regards,
CA Sanjay Thampy
FCA, Grad.CWA, CS, DBM
M/s. Sanjay Thampy & Associates
Chartered Accountants
Phone: (O) +91 8850141756
Mobile: +91 9821126197
It's only fair to share...
  •  
  •  
  •  
  •  
  •  
  •  
Replies: 6

You might also like …

6 thoughts on “Higher TDS from today (01st July 2021) – All you need to know – simplified

Post Comment

Your email address will not be published. Required fields are marked *

CommentLuv badge

This site uses Akismet to reduce spam. Learn how your comment data is processed.