Didn’t file ITR for last two years? Banks, mutual funds can check, may levy double TDS |  Photo Credit: Thinkstock
In case you’re one of those who haven’t filed Income Tax Returns for the last two years but the aggregate Tax Deducted at Source (TDS) and payments made to you Tax collected at source (TCS) deducted from payments made to you in each of the cases exceeded Rs 50,000 then you will be levied higher interest rate.
Starting July 1, institutions such as banks, mutual funds houses that deduct TDS, TCS can now check whether someone has filed their ITR in case income crosses the TDS limit of Rs 50,000. They may levy upto two twice the amount, in case such a person has not filed tax return for the last two years.
The Income Tax Department has even launched a compliance check utility for institutions which deduct TDS, TCS on its portal. The I-T department has even complied a list of names of taxpayers who have not filed their ITRs for the last two years, which may be used by these dedicators.
But there are ways in which taxpayers can check what to do in case their name appears on the list.
According to Budget 2021, higher TDS, TCS will be applicable to those taxpayers who fulfil these two conditions: not filed their ITRs in the previous two fiscals for which the due date has expired as per section 139(1) of the I-T Act, 1961 and sum of TDS and TCS in each of financial year is more than Rs 50,000.
Higher TDS would not be deducted in case the individual has filed either belated ITR or filed it after receiving a notice from the IT Department, as per experts.
Income Tax Department released a new functionality ‘Compliance Check for Section 206AB & 206CC’ 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:llreport.insight.gov.in) of Income-tax Department. Specified person refers to those who haven’t filed their ITRs in the last two years.
Here the deductors can check whether a person’s income exceeds the specified TDS limit. They shall then decide what the tax on the income accrued should be based whether the individual satisfied the above mentioned conditions.
For example, if income on fixed deposit during financial year 2021-22 exceeds Rs 40,000 then tax would be deducted on the interest income.
The deductors can check using PAN of the deductee as per circular on the reporting portal and get a response from the reporting portal whether TDS was deduced at higher rate.