TDS on Payment Made to Government

TDS on Payment Made to Government

-Dr. Lalit Kumar Setia

Whether TDS is deducted on payment made to Government or not?

Whenever any person pays any amount to Government in form of interest or dividend or any income, there is no need to deduct TDS on such payments. Because the TDS deducted is also paid to the Income Tax department, which is a part of Government, therefore, in case of any sum payable to the Government, the Reserve Bank of India, or to any corporation which is exempt from income tax, or to a mutual fund specified under clause 23D of section 10 of the income tax act.

TDS may be required to be deducted:

It there is any Government organization which carries its PAN number and is taxable in Income Tax Act, then TDS may be deducted as per norms whenever making any payment to it. For example, if a person is paying any amount to any individual/firm/company which has its PAN number whether that is with the stake of Government or not, but is subject to the filing of Income Tax Return, then the TDS will be deducted from the amount payable to such individual/firm/company. 

The persons who are required to deduct TDS should firstly take TAN Number and be registered for deduction of TDS. After deducting TDS it is required to deposit the same within the prescribed time limit.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. The article was published on 8th August, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

Next Page:

https://drlalitsetia.blogspot.com/2021/07/how-person-caught-for-tax-evasion.html

Compliance of 206AB for DDOs

Compliance of 206AB for DDOs

-Dr. Lalit Kumar Setia

In the Union Budget 2021, a new rule was introduced to deduct Tax Deduction at Source (TDS) at higher rates on cases with certain nature of income and from the persons who have not filed Income Tax Return (ITR) in the last two years and total amount TDS exceeds Rs. 50,000 in each year. How to know, whether the person whose TDS is being deducted is the person with requirement to deduct TDS rates at higher rate or not? What will be the rate of TDS if it is required to deduct at higher rate? How to ensure compliance of Section 206AB which is having this rule?

How much TDS be deducted if person lies in certain category to deduct TDS on Higher Rate?

As per provisions, the TDS will be either “twice the rate of TDS normally deducted as specified in a particular relevant section” or 5% whichever is higher. It means the TDS rate will be at least 5% for such persons and higher than 5% if twice rate of TDS is more than 5%.

How to know that the person whose TDS to be deducted, has not filed ITR during last two years and total TDS amount exceeds Rs. 50,000 in each year?

The Deductors (DDOs in Government) required to ensure compliance of 206AB & 206CCA which states to deduct TDS at higher rates for certain category of persons. How to know whether the person whose TDS is being deducted falls in such category or not.

The Income Tax Department web-portal has a functionality to check such persons by inserting their PAN number or PAN Numbers in bulk. The deductors (if required) can feed PAN number of the person and get the response from the web-portal, download the response in .pdf file, and thereafter keep the same or show the same to the person and deduct TDS at higher rates. For the Financial year 2021-22, from 1^st July 2021, it is enforced to implement section 206AB and 206CCA.

The persons who did not file Income Tax Returns (ITRs) of FY 2018-19 and FY 2019-20 and have aggregate of TDS amount Rs. 50,000 or more in each of the previous years; will be listed in that functionality. The Income Tax Department will list such persons every year and according to the list, the Deductors will have to deduct TDS at higher rate for such persons whose name is listed in the functionality.

As per notification no. 1 of 2021-Income Tax dated 22.06.2021:

Compliance Check Functionality for Section 206AB & 206CCA of Income-tax Act 1961

Section 206AB and 206CCA inserted in the Income-tax Act,1961 (effective from 1st July 2021), imposed higher TDS/TCS rate on the “Specified Persons’ defined as under,

“For the purposes of this section ‘ specified person” means a person who has not filed the retums 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 retum 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.

Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.

Explanation.-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.”

2. To facilitate Tax Deductors and Collectors in identification of Specified Persons as defined in sections 206AB and 206CCA, the Central Board of Direct Taxes (“CBDT”), in exercise of powers conferred under section 138(1 )(a)(i) of Income-tax Act, 1961 (Act), has issued Order via F.No. 225/67/2021/ITA.II dated 21.06.2021 , directing that Director General of Income-tax (Systems), New Delhi shall be the specified income-tax authority for furnishing information to the “Tax Deductor/Tax Collector”, having registered in the reporting portal of the Project Insight through valid TAN, to identify the ‘Specified Persons’ for the purposes of section 206AB and 206CCA of the Act through the functionality “Compliance Check for Section 206AB& 206CCA”.

3. Income Tax Department has released a new functionality ·Compliance Check for Section 206AB & 206CCA to facilitate tax deductors/collectors to verify if a person is a “Specified Person” as per section 206AB & 206CCA. This functionality is made available through (https://report.insight.gov.in) of Income-tax Department. Kindly refer to CBDT Circular No. 11 of 2021 dated 21.06.2021 regarding use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961 .

4. The following procedure is laid down for sharing of information with tax deductors/collectors:

a) Registration: Tax Deductors and Collectors can register on the Reporting Portal by logging in to e-filing portal (http://www.incometax.gov.in/) using e-filing login credential of TAN and clicking on the link “Reporting Portal” which is available under “Pending Actions” Tab of the e-filing Portal. After being redirected to the Reporting Portal, the tax deductor/collector needs to select Compliance Check (Tax Deductor & Collector) under Form Type. The details of the principal officer also need to be provided by clicking on “Add Principal Officer” button. The principal officer is the authorized person of the tax deductor/collector to use the Compliance Check functionality on reporting portal. After submission of registration request, email notification will be shared with the Principal Officer along with ITDREIN details and login credentials.

b) Accessing the Compliance Check functionality: 

Principal Officers of the entities (Tax Deductors & Collectors) which are registered with the Reporting Portal through TAN shall be able to use the functionality after login into the Reporting Portal using their credentials. After successfully logging in, link to the functionality “Compliance Check for Section 206AB & 206CCA” will appear on the home page of the Reporting Portal.

c) Using “PAN Search” mode: 

Under the “Compliance Check for Section 206AB & 206CCA” page, “PAN Search” tab may be selected to access the functionality in PAN Search mode. In this mode single valid PAN along with captcha can be entered at a time and output will be available with following fields,

o    Financial Year: Current Financial Year

o    PAN: As provided in the input.

o    Name: Masked name of the Person (as per PAN).

o    PAN Allotment date: Date of allotment of PAN.

o    PAN-Aadhaar Link Status: Status of PAN-Aadhaar linking for individual PAN holders as on date. The response options are Linked (PAN and Aadhaar are linked), Not Linked (PAN & Aadhaar are not linked), Exempt (PAN is exempted from PAN-Aadhaar linking requirements as per Department of Revenue Notification No. 37/2017 dated 11th May 2017) or Not-Applicable (PAN belongs to non-individual person).

o    Specified Person u/s 206AB & 206CCA: The response options are Yes (PAN is a specified person as per section 206AB/206CCA as on date) or No (PAN is not a specified person as per section 206AB/206CCA as on date).

Output will also provide the date on which the “Specified Person” status as per section 206AB and 206CCA is determined.

d) Using “Bulk Search” mode: 

Under the “Compliance Check for Section 206AB & 206CCA” functionality page, “Bulk Search” tab may be access to access the functionality in Bulk Search mode. This mode involves following steps:

i. Preparing request (Input) file containing PANs: Under the “Bulk Search” page, CSV Template to enter PANs details may be downloaded by clicking on “Download CSV template” button. PANs for which “Specified Person” status is required may be entered in the downloaded CSV template. The current limit in the number of PANs in a single file is 10,000.

ii. Uploading the input CSV file: Input CSV file may be uploaded by clicking on Upload CSV button. Uploaded file will start reflecting with Uploaded status.

iii. Downloading the output CSV file: After processing, CSV file containing “Specified Person” status as per section 20SAB & 206CCA of the entered PANs will be available for download and “Status’ will change to Available. Output CSV file will contain PAN, Masked Name, Specified Person Status as per section 20SAS & 206CCA, PAN-Aadhar Link status and other details as mentioned in paragraph c) above. After downloading of the file, the status will change to Downloaded. The download link will expire and status will change to Expired after specified time (presently 24 hours of availability of the file).

5. For any further assistance, Tax Deductors & Collectors can refer to Quick Reference Guide on Compliance Check for Section 206AS & 206CCA and Frequently Asked Questions (FAQ) available under “Resources’ section of Reporting Portal. They can also navigate to the “Help” section of Reporting Portal for submitting query or to get a call back from Customer Care Team of Income-tax Department. Customer Care Team of Income-tax Department can also be reached by calling on its Toll Free number 1800 1034215 for any assistance.

6. This issues with the approval of CBDT. (Sanjeev  Singh), ADG(Systems)-2 CBDT. 

On which categories of income, Section 206AB is not applicable?

The Drawing and Disbursing Officers (DDOs) in Government organizations and employers in Private Sector Organizations; generally deduct TDS on Salaries of the employees u/s 192 of Income Tax Act. The new section 206AB is not applicable on such TDS deduction. Further, it is also not applicable on TDS deducted on withdrawl from Provident Funds u/s 192A, Winnings from Lotteries / races on which TDS is deducted u/s 194B & 194BB, Payment of certain amount on which TDS is deducted u/s 194N, and Income in respect of investment in securitisation trust on which TDS is deducted u/s 194LBC.

Section 206AB and Section 206CCA will be applicable on the persons whose time limit for filing ITR under section 139(1) has expired and the person has not filed ITR during last 2 previous years and also whose aggregate TDS in each of these previous years is Rs. 50,000 or more.

Are you interested in an Online Course related to Income Tax?:

1. https://smartinstituterls.blogspot.com/2022/12/income-tax-matters-in-government.html 

2. https://smartinstituterls.blogspot.com/2022/12/computation-of-income-tax-liability.html

Previous Article

Next Article

Attention Deductors - Deposit of TDS

Attention Deductors - Deposit of TDS

-Dr. Lalit Kumar*

The TAN holders or deductors are required to deposit the amount deducted from the payments and issue a TDS certificate to the recipients of the payment. There are two ways to pay the TDS in the Income Tax Department; firstly without generating the Income Tax Challan and Secondly with generating the Income Tax Challan. In the case of TDS deposited without generating Income Tax Challan, the due date for the deposit of TDS is the same day when the payment is made and tax is deducted. In the case of TDS deposited by Income Tax Challan, the due date for the deposit of TDS is the 7^th of the coming month in which the deduction is made from the payment.

There are a few exceptions, in case the sum is deducted under section 194-IA or 194-IB or 194M then it is required to generate challan in Form no. 26QB or 26QC or 26QD; the due date is 30 days from the end of the month in which the deduction is made.

How to pay or deposit the amount of TDS:

Generally, the TDS is processed through electronic fund transfer at the time of making payments on which TDS is required to be deducted. For example, the Government Department or organizations remit the TDS without generating Income Tax Challan, by making book adjustments or book transfers and furnishing 24G or 26G to NSDL every month. However, if it is not possible, then the deductor can also furnish Challan No. 281 in an authorized bank for processing the amount of TDS to the Income Tax Department.

What will happen if TDS is not deducted or deposited by the Deductors?

It is the duty of the deductor to deduct the TDS before making payments and remit the same by adopting the above-said procedure. In case, the deductor failed to deduct TDS from the payment and not deposit the same to the Income Tax Department, it means the deductor is in default.

In such circumstances, (a) in case the deductor fails to deduct TDS, it is required to pay simple interest @1% per month or part of a month, on the amount of TDS for the period of delay (months or part of a month between “Date of tax deducted and date on which tax was deductible). (b) in case the deductor deducted the TDS but not deposited, it is required to pay simple interest @1.5% per month or part of a month, on the amount of TDS for the period of delay (months or part of a month between “Date of tax actually paid and date of TDS deducted).

Further, under section 271C, there is a penalty provision equal to the amount of TDS not deducted by the Deductor. Such penalty can be up to the amount of tax in arrears as per the provisions of section 221. Apart from the penalty, the deductor shall be punishable with rigorous imprisonment for a term not less than 3 months but which may extend to 7 years.

Are you interested in an Online Course related to Income Tax?:

1. https://smartinstituterls.blogspot.com/2022/12/income-tax-matters-in-government.html 

2. https://smartinstituterls.blogspot.com/2022/12/computation-of-income-tax-liability.html

Previous Article

Next Article

Income Tax Department Is Looking At You

Income Tax Department Is Looking You!

-Dr. Lalit Kumar Setia

Dear Learners! Now you can join my online courses - Apply now!

https://docs.google.com/forms/d/e/1FAIpQLScvTHllGwDyt9lqJyfF_cK-pnKiM7QIkKir339GlXYI8UJbfA/viewform

Why Government imposes Income Tax?

Developed and developing nations around the world, adopt the tool of imposing income tax as a major source of income. From the amount collected through income tax, the development expenditure is financed and it is ensured to develop the nation economically as per the needs of the citizens. The Government finds it very easier to collect income tax by using 'Tax Deduction at Source'. The people who are doing jobs under their employers, face TDS on Salary which is deducted by the employers. The people earning interest on deposits, face TDS on interest on deposits by the concerned financial institutions. It is very hard for the Government collecting income tax, without ensuring the effective process of Tax Deduction at Source (TDS). 

Collection of Income Tax from people other than Employees and Investors:

One of the biggest problems of the Government is to collect income tax from self-employed people with making fewer investments in financial institutions. For example, Mr. X is running a shop and reporting less income. What can be done by the Government? Definitely, the Government may check the financial records of the shop to detect accurate income and impose penalties under Income Tax Act. But the problem is that Mr. X has managed the accounting books with too much care to be caught in the concealment of income and even he hired the services of a chartered accountant to plan and protect him from heavy taxes. Therefore, it is very hard to collect taxes from people who are neither employees nor investors.

Why do people prefer to start their own business than to do a job?

The take-home income of the self-employed people is higher than the incomes of employees who are serving any organization and it is due to non-compliance of income tax act or in other words with the help of theft of income tax. The rates of income tax and cess are increasing every year but the heat of the increase in income tax and cess is very less for the following people:

1. The people doing agriculture (farming only) 

2. Those who are having the hidden income (without the issue of bills to the users/buyers), and 

3. Those who are supported by Chartered Accountants (firms and companies with concealment of income using hired CAs).

It is very hard to collect a fair amount of income tax from the above people. To finance the development expenditure of the nation, the Government is raising taxes and charging more taxes from the people who comply with them i.e. employees and investors.  

The vigilance of Income Tax Department on Spending/Investing

Are you spending cash to buy the property and paying less tax in general, the income tax department is looking at you and noticing your transactions.  

No matter you are giving this information to the Income-tax department or not. The department is taking care of your such transactions. You being a taxpayer, can view the transactions recorded in your login at incometax.gov.in in the Annual Information Statement.

26AS and AIS Statement

The Income Tax Department rollout the new statement - AIS (Annual Information Statement) which gives all the details of financial transactions against a PAN number. Earlier there was only one statement i.e. Tax Credit Statement 26AS, now there are two statements, the additional statement is the Annual Information Statement. The AIS Statement is a more detailed statement of the income of the taxpayer including income from interest on the savings accounts, income from mutual funds, etc. Every taxpayer can download the statement from the portal of incometax.gov.in. After login, in the Services tab, there is an option of Annual Information Statement (AIS). In the AIS statement, there is a tax information summary which is brief details of the Annual Information Statement for the convenience of the taxpayer. 

The password of the downloaded Annual Information Statement (AIS)

The Annual Information Statement can be downloaded as a .pdf file or .json file as per the requirement of the taxpayer. The downloaded file is password protected to reduce the misuse of the confidential information and credentials of the taxpayer. The password is PAN Number (in Capital letters) followed by Date of Birth. For example, your PAN number is ATMPO1234R and your Date of Birth is 1st December 1987; then the password will be ATMPO1234R01121987. In an AIS statement, a taxpayer can access the details of 'interest on all savings accounts connected with his/her PAN number', 'income from Salary as per the statement filed by the employers', 'income from the investments or mutual funds as per the statement filed by banks and financial institutions, 'income from dividends, etc. 

Tax Planning and Tax Evasion

Doing tax planning is good for everyone but tax evasion is a crime. In case, anyone is evading tax and it is traced by the Income Tax Department or other authorities by observing expenditure of the persons, then the tax evaders are panelized as per the provisions of the Income-tax act. 

As per new provisions of the Income Tax Act, financial institutions including banks, brokerage companies handling mutual funds, and Registrars of properties are required to intimate the Income Tax Department about the transactions of heavy amounts with the PAN or TAN number of the person.

Fixed Deposits in Financial Institutions: 

Whenever any person deposits an amount in the fixed deposit account and it becomes more than Rs. 10 lacs against his PAN number, the financial institutions require to inform the income tax department. However, in case there are old Fixed Deposits renewed every year and be more than Rs. 10 Lacs, there is no need to inform Income Tax Department of such old Fixed Deposits.

The amount deposited in Bank in one Financial Year:

As per rules, the financial institutions are required to intimate Income Tax Department about the persons who have deposited more than Rs. 10 Lacs during the Financial Year. There is a provision to pay income tax for making cash deposits above Rs. 10 Lacs.

Beware of using more amount through Credit Card:

If you are using a credit card and get your limits enhanced for use of more amounts. In case, the amount due on the usage of a credit card becomes more than 1 Lac, the Financial Institutions are required to inform the Income Tax Department. And during the year if the amount spent, becomes more than 10 Lacs the Income Tax Department imposes a tax upon it. 

Purchase of higher amount properties:

The properties are registered whenever purchased. If you are purchasing a property with costs more than 30 Lacs, the registrar is required to send the information to the Income Tax Department. In case of the purchase of bonds, if the amount of bonds, shares, and mutual funds issued by the company becomes more than Rs. 10 Lacs, then the company is required to intimate it to the Income Tax Department because the buyer is required to pay tax in such transactions. 

Black Money Control by Seeking Statement of Financial Transactions:

The income tax department is now more active to curb the practices of people accumulating black money. No doubt, the initiatives have also been taken earlier by the department by launching various disclosure schemes. But now focus is to utilize the information from certain government agencies and authorities for identifying certain transactions based on reliable submitted reports of high-value transactions in "Annual Information Return (AIR)" u/s 285BA.

What do people are preferring today to increase take-home income?

In India, work in Multinational Companies (MNCs) particularly, the work from home (WfH) with getting salaries in cryptocurrency which is not easily regulated by the Government; is a new challenge for the Indian Government. People are preferring this mode of income to increase their take-home income (without the imposition of income tax by the Government). 

A Course on e-filing Income Tax Returns (ITR) for Salaried Persons is organized in online mode for specific training for accurately e-filing Income Tax returns specifically ITR-1.

Are you interested in an Online Course related to Income Tax?:

1. https://smartinstituterls.blogspot.com/2022/12/income-tax-matters-in-government.html 

2. https://smartinstituterls.blogspot.com/2022/12/computation-of-income-tax-liability.html

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 26th May 2021 and last updated on 7th October 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

More content of your interest:

https://questionsinexam.blogspot.com/2021/07/fixed-medial-allowance-from-employer-is.html  

https://questionsinexam.blogspot.com/2021/07/taxability-on-conveyance-allowance.html  

https://groomthepersonality.blogspot.com/2018/02/financial-terminology-for-drawing-and.html  

Payment and Status of Income Tax

Payment and Status of Income Tax 

Recent directions (as on 26.06.2021) to extend the due dates in Tax Compliance:

Tax Collection by Government:

The Government collects income tax in three ways i.e. Tax Deduction at Source (TDS), Tax Collection at Source (TCS) and Voluntary Payments by Taxpayers i.e. Advance Tax and Self Assessment Tax. It is the responsibility of each citizen, each trader / firm / company to compute and deposit the tax within the prescribed time limits. The taxable amount can be paid in banks by filing the desired challan form and the bank returns the information duly stamped by bank stating BSR (Bankers Serial of Receipt), CIN (Challan Identification Number) and date of payment. The assessee can also check the status of challan by visiting www.tin-nsdl.com and click upon Challan Status Enquiry. Apart from it, the 26AS statement of the assessee will also show the credit of TDS/TCS/Advance Tax/Self Assessment Tax deposited by the assessee.

Tax on Regular Assessment:

The income tax department checks the self-assessed income tax paid by the assessee and in case, it is less than the actual tax then the department raise the demand which is known as tax on regular assessment-400.

Advance Tax:

Advance Tax is calculated on the basis of expected tax liability and it is required to be paid in installments i.e. upto 15% by 15^th June, 45% by 15^th September, 75% by 15^th December, and 100% by 15^th March of the Financial Year. The advance tax is deposited through Challan ITNS 280.

What to do if 26AS is not showing accurate tax credit?

The tax credit is shown on real-time basis in 26AS if payment of the self-assessment tax or advance tax is made. In case of TDS/TCS, the tax credit is shown when the deductor or collector file his TDS/TCS statement by quoting accurate PAN number of the assessee whom tax is deducted or collected at source. In case, the deductor or collector made errors in quoting accurate PAN then the tax credit will not be reflected and in such cases, it is required to file PAN correction statement or to furnish a correction statement by the banker/deductor/collector.

Do You Know

If any taxpayer is giving any amount in "Income from other sources", and paying income tax upon it. Even in such case, he / she requires to maintain proof of the earning and the necessary records as per the provisions of income tax. Merely declaring an income under other sources, cannot be used to make black money transformed in white.

Even if there are no prescribed provision for maintaining any record in any case, then also it's duty of taxpayer who is mentioning an amount as income, to maintain reasonable record to support the claim of income.

Extended due dates by Income Tax Department

Previous Article

Next Article

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

Income Tax Changes from FY 2021-22

Income Tax Changes from FY 2021-22

In last article, we learned how Fuel Taxation is being used to increase the collection of tax to meet the fiscal deficit. In the Financial Budget 2021, the income tax rates are not increased and the Government projects to have collection from disinvestment, GST, and Fuel Taxation. 

No Change in Income Tax Slabs:

The rates of income tax are same as earlier in both old tax regime and new tax regime. No changes are made.

Relaxation for filing of ITR for senior citizens above age of 75:

The senior citizens who are above the age of 75 and receiving income only from pension and interest as a source of income, will not require to file income tax return. However, for such relaxation it is the condition that their interest income should be from the same bank in which the amount of pension is deposited. It is worth to mention here that in such circumstances; the bank will deduct the tax deduction at source (TDS) as per the taxable liability of the senior citizen after keeping in mind the deductions u/s 80C to 80U and rebate of 87A. It means the filing of ITR will not be required because the tax liability already be deducted at TDS by the bank.

Pre-filling of ITR forms:

Like earlier, the 26AS tax credit statement data automatically pre-filled by the web-portal of income tax india efiling dot gov dot in. From April 1, 2021; the details of dividend, interest, and capital gains will be pre-filled so that the same cannot be concealed by the taxpayers. Similarly, the details of salary incomes, tax payments, TDS etc. will also be pre-filled on the basis of the information available with the income tax department. It is worth to mention here that the deductors including employers, banks, financial institutions etc. normally communicated the amount of TDS to the income tax department on monthly and quarterly basis; the same will be considered to pre-fill the information.

Interest on part of PF contributions which are exceeding Rs. 2.5 Lacs in a year; will be taxable:

From 1^st April, 2021 if there is interest income earned on the portion of PF contributions which are exceeding Rs. 2.5 Lacs in a year; will be taxable in the hands of recipients. This provision is applicable on all the three PF contributions including GPF, EPF, and PPF. Due to this provision, the high income citizens would like to make investments in NPS instead of PF after the amount be invested up to Rs. 2.5 Lacs in their PF accounts. (How Money Grows in NPS)

No TDS on dividend payments to Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvITs):

From the year 2020-21, the dividend distribution tax was abolished and the dividend income was made taxable in the hands of shareholders. From the year 2021-22, the dividend payments to REIT and InvITs will be exempt from TDS.

Incorporating Section 206AB for charging TDS on higher rate from the Non-filers of ITR:

The citizens who are still not filing income tax return (ITR), are required to pay more TDS on their incomes. The higher rate of TDS will be either 5% or twice the rate specified in the relevant provision of the Act. This is done to encourage citizens to file the income tax return (ITR).

Capital Gains Tax on returns of Unit Linked Insurance Plans (ULIPs):

The ULIPs issued on or after 01.02.2021 in which an individual is paying annual premium above Rs. 2.5 Lacs will be subject on Capital Gain Tax at the time of redemption.

Reduction in Last date for filing delayed ITR:

Up to 31st March, 2021; the last date for filing delayed ITR was 31^st March, on voluntarily basis; means the return of the FY 2019-20 can be filed up to 31^st March 2021 if delayed. But from FY 2021-22, the last date of filing delayed ITR will be 31^st December, on voluntary basis; means the return of FY 2020-21 can be filed up to 31^st December 2021 instead of 31^st March 2022. It is worth to mention here that u/s 234F, if an individual is filing ITR after the due date but before 31^st December; then maximum penalty is Rs. 5000 (Five Thousands). In case, anyone wants to revise the filed ITR, then it can be revised up to the end of Assessment Year.

How to know Income Tax Refund Status:

Now, it is very easy to view the income tax refund status, just login with your PAN Number and password on the website of incometax dot gov dot in and go to "My Account". Click the command "Refund/Demand Status". The portal will display the status with mode of payment by which it has been credited in your account. 

It is worth to mention here that the income tax refund comes within 20 - 45 days after processing of the income tax return (ITR) by Centralized Processing Centre (CPC), however, it is delayed in few circumstances:

If any query is raised by the Income Tax Department and the reply to that query took times from your side. In such cases, the refund is withheld by Income Tax Department for assessment and to clarify any mismatch between the details submitted by taxpayer and the details already available with the Income Tax Department. 

What can be done for getting delayed Income Tax Refund?

First of all, check your registered email whether there is any query pending from the Income Tax Department or not. If there is any query, then respond as per the directions provided in the email. 

In case, no such email is available, then check dashboard after logging into the account on incometax dot gov dot in. 

In case, the bank account details submitted by the taxpayer during filing ITR are wrong, then also the income tax refund is delayed. In such case, the taxpayer can update the banking details, to get the refund at the earliest. 

The income tax refund status can also be checked upon the website of NSDL. 

*Copyright © 2021 Dr. Lalit Kumar. 

Previous Article

Next Article

Income Tax Changes from FY 2020-21

 Income Tax Changes from FY 2020-21

It is well known that the income tax is levied on income, more the income, more the tax payable. There are different slabs on which basis, the income tax liability is computed in the hands of individuals of India. The budget of the year 2020 revised the tax rates which will be applicable from FY 2020-21. 

The new slabs are:

(i) Up to 2.5 Lacs – NIL (as earlier, no change);

(ii) From 2.5 Lacs to 5 Lacs – 5% (as earlier, the rebate of 87A will make it NIL if the income is up to 5 Lacs).

(iii) From 5 Lacs to 7.5 Lacs – 10% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(iv) From 7.5 Lacs to 10 Lacs – 15% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(v) From 10 Lacs to 12.5 Lacs – 20% (earlier it was 30%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(vi) From 12.5 Lacs to 15 Lacs – 25% (earlier it was 20%, however if someone opts for 10% then he/she has to give up the exemptions and deductions mentioned below).

(vii) Above 15 Lacs – 30% (as earlier).

Health and Education Cess:

After applying these slabs and computing tax liability, it will be required to levy 4% Health and Education Cess (as earlier, no change).

Which exemptions and deductions will have to be give up, if someone decides to opt new slab rates?

(a) Exemption on House Rent Allowance (HRA): 

Most of the employees claim exemption on HRA. In case, new tax slab rates are opted, the exemption of HRA will not be provided.

(b) Exemption on Leave Travel Allowance: 

It will not be available and it will be fully taxable for the individuals opting new slab rates.

(c) Exemption in Children Education Allowance: 

It will not be available. Those who are taking Children Education Allowance if decides to compute tax in new tax slab rates, their exemption on Children Education Allowance will not be provided.

(d) Standard Deductions on Salary, House Property etc.: 

It will not be provided to the individuals who want to compute their tax liability with new tax slab rates.

(e) No Exemption on ‘Interest on House Loan’: 

The individuals taking house loan for building or purchasing self occupied property are eligible to get deduction on up to Rs. 2 Lacs of amount paid for Interest on House Property and in case, the house is let out, the deduction has no limit while computing income from House Property. But if an individual takes the new slab rates in consideration, then there will be no deduction available for ‘Interest on House Loan’.

(f) Deduction of Section 16: 

The deduction under section 16 which is for entertainment allowance and employment / professional tax will not be available for the individuals opting new tax regime.

(g) Deduction on Family Pension: 

It is presently allowed under section 57 (iia) up to Rs. 15000 which will not be allowed if an individual opts the new tax regime.

(h) Deductions for disability under section 80DD and 80DDB: 

These are available now but the individuals who decides to pay tax as per new tax regime, will not allowed to claim these deductions.

(i) Deduction for Donations under section 80G : 

It will also not be available for those who opt for new tax regime.

(f) Deduction under section 80C, 80 CCD (1B), 80D, 80E etc.: 

The 80C investments and savings will not provide any deduction however these investments are still lucrative keeping in mind the state of economy and the returns from the banking and post office instruments. Further, the medical insurance premium paid and claimed under section 80D will also not be available. However, the contribution by an employer in the account of EPF or NPS up to Rs. 7.5 Lacs in a Financial Year will not be taxable in the hands of employee.

However, deduction under section 80 CCD (1B) can be claimed on 10% of (Basic Pay + Dearness Allowance) if contributed on behalf of employee in Tier – I account of NPS. If contribution is made more than 10% then it will be taxable in the hands of employee and no deduction will be provided on that part of contribution in Tier-I account of NPS. To know how money grows in NPS account, kindly go through "How Money Grows in NPS"

The section 80CCD (2) will also remain available even if the new tax regime is opted by the employee. It is deduction for employer’s contribution in pension funds including NPS.

The deductions provided in Chapter VIA of the Income Tax Act i.e. like section 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc; will not be available for the individuals opting for new tax regime.

*Copyright © 2020 Dr. Lalit Kumar. All rights reserved.

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. The article was published on 1^st September, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com

Previous Article

Next Article