The Finance Act 2021 has introduced two new sections in the Income Tax Act, viz., Section 206AB & Section 206CCA. This is a special provision that provides for deducting or collecting tax at higher rates. Through these sections, an attempt has been made to penalize & trace down the defaulters, who, despite having taxable income do not file their income tax returns. Section 206AB provides for higher rates of TDS while Section 206CCA specifies the higher rates of TCS.
Finance Act 2020 introduced Section 206C(1H), where a person who is a seller and receives consideration for the sale of goods of value or aggregate value which exceeds Rs 50 lakhs in the previous year shall, at the time of receipt of money, collect TCS at the rate of 0.1% of the value exceeding Rs 50 lakhs.
CBDT introduced a new section in the Income Tax Act, w.e.f.1st September 2019, to bring in transactions of cash withdrawals under the tax net. According to Section 194N, all the Banks to which Banking Regulation Act applies, a Co-operative Society and a post office shall be responsible to deduct TDS, if any person withdraws cash from the account/s maintained with them, being the amount or aggregate of amounts exceeding rupees one crore during the financial year.
As the world is going through major health risks due to the corona pandemic, it is also facing economic risks in parallel due to lockdown in many countries because of the corona pandemic. As the entire country has come to a standstill, it has affected the earnings of many people thus leaving them with concerns for their future.
As the government of India has emphasized more on tax to be deducted to ensure that the correct tax amount is deposited with the treasury of government and to avoid any loopholes for evasion of tax, under various provisions of Income Tax Act, it has become very important for the persons who are the payee of the amount to become more informed and vigilant about tax implications on the amount paid by them.
In the budget of 2017, the government inserted a new section 194IB. Under this section, any individual or HUF, who pays a rent of Rs 50,000 or above per month, will have to deduct TDS at the rate of 5% per annum. This new section has become effective from 1st June 2017.