The Finance Act 2021 introduced new TDS/TCS sections which are applicable w.e.f. 1st July 2021. They prescribe a HIGHER WITHHOLDING RATE FOR NON-FILERS OF TAX RETURNS. Relevant provisions are:

Section 206AB – Higher rate of TDS for non-filers of ITR

• Deductee has not filed ITR of last 2 previous years and time limit to file return has expired
• Aggregate TDS and TCS of deductee is Rs. 50,000 or more in each of the previous years
• Rate of TDS shall be higher of following-
• twice the rate specified in the relevant provision of the Act or rate in force; or
• @5%.
• TDS @20% if PAN not provided
• Not applicable to section 192 (salary), 192A, 194B, 194BB, 194LBC and 194N
• Not applicable to non-residents

Section 206CCA – Higher rate of TCS for non-filers of ITR

• ITR of last 2 previous years is not filed and time limit to file return has expired
• Aggregate TDS and TCS is Rs.50,000 or more in each of the previous years
• Rate of TCS shall be higher of following-
• at twice the rate specified in the relevant provision of the Act; or
• at the rate of five per cent.
• Not applicable to non-residents

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