Introduction

Big trouble for the Non-filers of Income TAX as they have to face a higher monetary penalty from this current fiscal year, which has already started from 1st April 2021.

Parliament has passed “The Finance Act 2021” which has a special provision for deduction of TAX for Non-filers of income-tax returns. Also, if someone does not have a PAN Card, the limit of tax deduction will become even higher, which can go up to 20%. A new section ‘206AB (I) has been introduced as per the special clause related to TDS and 206 CCA is introduced related to TCS in The Finance ACT 2021. As per the Finance Minister’s budget, the new rule will come into effect from July 2021.

The new TDS act says that the tax shall be deducted at higher than the rates given below:

  • The tax shall be deducted at twice the rate given in the relevant rule of the new Finance Act 2021.
  • The tax shall be deducted at twice the rate or rates in force or
  • The tax shall be deducted at the rate of 5%

The new provision will help in improving government accountability and in the future more Income Tax Return can be seen. It will also allow more people to file ITRs.

Who is getting affected by the new Act

  • All the non-filer who have paid Rs 50,000 or more TCS or TDS but did not file Income Tax Return will be affected by this new provision.
  • A non-resident who does not have a permanent establishment in India is exempted from the new rule.
  • If any person fails to provide his/her PAN number to the payer, the TDS rates applied will be higher as 20%.
  • The new provision will also affect the corporate industry.

Payments on which the new provision is applied

The new Provision will be applicable on a variety of payments which includes contracts, rents, professional services, interests, and many more. But the new provision is not applicable on the transactions in which the maximum amount of tax is required to be deducted. So, in that case, the following transactions are not included.

  • The payments which you get as a salary.
  • If you are winning money from a lottery or any crossword puzzles or card games.
  • If you are doing any kind of Premature withdrawal of EPF
  • If you are getting Investment income from a securitization trust
  • If you are winning money from any horse races
  • And also, TDS is levied on cash withdrawals exceeding Rs. 1 crore.

How it is affecting the industries

The new provision given by the finance minister could have a big effect on the corporate sector especially.
First of all the TDS is needed to be deducted by the company so in that case if the company needs to pay any individual(Vendor) then the company has to keep updated on the income tax return filings of the individual whom they need to make payments by doing income tax return verification.

What the company has to be updated about is whether the specified person has filed his income tax returns of last two financial years or not according to the new Finance Act 2021 by doing income tax return verification and if the specified person did file the income tax return then it is well and good as they do not need to worry about any extra deduction on the TDS. The company also needs to see if the specified person has provided his or her PAN number to them or not as the TDS rates applied will be higher to 20%.

These are all the efforts that a company has to put in just to deduct the TDS of the specified person whom they need to pay according to the provision given in the Finance ACT 2021.

The Companies have to put in a lot of manpower and may have to do a bit more investment of time and money for just doing the Income Tax Return verification of the specified whom they need to pay.

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How the industries and companies Can do Income Tax Return verification or how they can check the ITR Filing Status:

Now the technology has evolved so much that the big tasks also look easy to handle. There are a lot of companies and organizations that provide solutions for all big and small problems like Income Tax Verification that industries face, one of which is mentioned below.

For all big and small companies and industries, it is a big problem to do multiple numbers of Income Tax Verification manually as they have to put in a lot of manpower and also have to invest a lot of time and money.
Nowadays there are few vendors which can help these companies to reduce the manpower and investment of time and money in tasks like Income Tax Verification or ITR filing Status checks and at the same time, the companies could focus on the real tasks that they want to achieve.
These vendors can help the big and small companies and organizations in saving time and money by automating the whole process of Income Tax Return Verification. So that they can be up to date with the Income Tax Returns filed by the specified people whom they need to pay.

How can we make it easy?

Surepass Technologies is one of the best vendors who help companies and organizations in automating their processes which also includes Income Tax Verification API.
Using Surepass’s Income Tax Verification API any company or organization can verify the last two years’ Income Tax Filing status of their vendors. The APIs can be integrated into any organization’s existing system seamlessly.

Summary

Parliament has passed “The Finance Act 2021” which has a special provision for deduction of TAX for Non-filers of income-tax returns. As per the Finance Minister’s budget, the new rule will come into effect from July 2021. All the non-filer who have paid Rs 50,000 or more TCS or TDS but did not file Income Tax Return will be affected by this new provision. The new provision does not apply to the salary you get. The new provision given by the finance minister could have a big effect on the corporate sector especially as the TDS is needed to be deducted by the company so in that case if the company need to pay any individual(Vendor) then the company has to keep updated on the income tax return filings of the individual whom they need to make payments by doing income tax return verification.

There are a lot of companies and organizations that provide solutions for all big and small problems like Income Tax Verification that industries face. These vendors can help the big and small companies and organizations in saving time and money by automating the whole process of Income Tax Return Verification. Surepass Technologies is one of the best vendors who help companies and organizations in automating their processes which also includes Income Tax Verification API.