The Union Finance Minister has noted that the Central Board of Direct Taxes (CBDT) has exempted the Reserve Bank of India from the special provisions of the Income Tax Act, 1961, regarding the tax deducted at source, and the tax collected at source for non-filers of an income-tax return.
In a notification, the Finance Ministry said: “In exercise of the powers conferred by clause (ii) of the provison to sub-section (3) of section 206CCA of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Reserve Bank of India to be a person referred to in the said clause.”
The ministry also issued a notification along the same lines under section 206AB of the Income Tax Act.
Section 206CCA of the Income Tax Act, 1961, provides tax collection at source (TCS) on amounts received by a specified person at rates higher than specified in the act. Under this, the tax is collected at twice the rate specified in the relevant provision of the Act, or at the rate of 5%, whichever is higher.
The tax shall be collected at source (TCS) on higher of the following:
> 2 times the rate given in the Income Tax Act or Finance Act or.
> 5%
If the person provides the PAN but has not filed the return for the last assessment year and the due date for filing has been expired and the aggregate of TDS or TCS in his case is Rs. 50,000 or more then the above rate shall apply. Just to save from this, if he doesn’t provide the PAN then tax shall be collected at 20% or a much higher rate as per section 206CC.
A higher amount of TDS shall be deducted on any type of transaction, such as contract payments, professional charges, rent etc., but excluding the following nature of payments:
> Salary (Section 192)
> Premature withdrawal of EPF (Section 192A)
> Winnings from any lottery or card games, or crossword puzzles (Section 194B)
> Section 194BA)
> Winnings from any horse races (Section 194BB)
> Income concerning investment in securitisation trust (Section 194LBC)
> Cash withdrawals (Section 194N)
> Non-residents who do not have a permanent establishment (PE) in India.
Section 206AB of the Income Tax Act mandates TDS at rates higher than standard prescribed rates if you do not file your income tax return. This section was introduced in 2021 and nudges people to file returns.
Under this, the tax is deducted at twice the rate specified in the relevant provision of the Act, or at the rate of 5%, or at twice the rates in force, whichever is higher.
Section 206AB is applicable to:
a. Those who have not filed your income tax return for One assessment year related to the one year preceding the year in which tax is to be deducted
b. The due date for filing ITR for those 1 years has passed by
c. The cumulative TDS in those 1 years is greater than Rs.50,000
The definition of “specified person” has been amended in sections 206AB and 206CCA of the Income Tax Act to exclude the following:
(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.