New Rules-Higher TDS applicable for non-filers of income tax returns

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In the 2021 Union Budget, the Government has proposed new rules in Section 206AB of Income Tax Act 1961 which requires every deductor to deduct taxes (TDS) at a higher rate of 5% if the deductee, whose aggregate of TDS & TCS is Rs 50000 or more in each of the 2 previous financial years, fails to file income tax returns in both the previous 2 financial years. These rules are proposed to be effective July 1, 2021.

In case of non-filing of an income tax return by you in both the 2 preceding financial years, the TDS % on the gross sales of products and services will increase to 5%. However, if you have filed a tax return for any one of the two years, the TDS rate would remain at 1% or 2%, depending on your tax status. We request you to take note of the above, and also note that the last date for filing the belated income tax return for FY 19-20 is March 31, 2021.

Here is the link to view your income tax return filing status: Check

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