The Finance Act, 2021 notified the new Section 206CCA of the Income Tax Act relating to specified provisions for the collection of tax deduction at source ( TDS ) on non-filers of Income Tax Return, which will be applicable from July 1.
In order to penalize those who did not file income tax returns (ITRs) despite being liable to, the government notified new Section 206AB and 206CCA under Income Tax Act.
Sub-section (1) of Section 206CCA gives the applicable TCS rate if the amount is received from a specified person, being higher than at twice the rate specified in the relevant provision of the Act; or at the rate of 5%.
If the provisions of Section 206CC is applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in Section 206CC.
Extract Of Section 206CCA
Sub-section (1) of the new section 206CCA seeks to provide that notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collectee) from a specified person, the tax shall be collected at the higher of the following two rates, namely, at twice the rate specified in the relevant provision of the Act; or at the rate of five per cent.
Sub-section (2) thereof seeks to provide, that if the provision of section 206CC is applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.
Sub-section (3) thereof seeks to define “specified person” tomean a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.
Proviso to the sub-section (3) provides that the specified person shall not include a non-resident who does not have a permanent establishment in India.
Explanation to the said section seeks to provide that for the purposes of this sub-section the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.
This amendment will take effect from 1st July, 2021.Subscribe Taxscan AdFree to view the Judgment