The Income Tax Department has amended the TDS rules 1962, making it more detailed and mandatory on the deductors side to state the reason for Non-deduction or less deduction of Income tax.
In the budget 2019-20, the Central government had introduced a new TDS rate of 2% on cash withdrawals of more than Rs 1 crore from a bank account in a financial year. In its latest notification, the Central Board of Direct Taxes (CBDT) has amended certain TDS forms to give effect to the new withholding Tax provisions under Finance Act, 2020.
“The new forms are more comprehensive and require payers to report not only those cases where TDS is deducted, but also cases where TDS is not deducted for any reason. Separate codes have been provided to cover different situations of deduction of TDS at lower rate/ non-deduction of TDS,” Shailesh Kumar, Partner, Nangia & Co LLP, said.
As per the amendment in the Rule 31A of the Income Tax rules, it is mandatory to “furnish particulars of amount paid or credited on which tax was not deducted or deducted at lower rate in view of the notification issued under second proviso to section 194N or in view of the exemption provided in third proviso to section 194N or in view of the notification issued under fourth proviso to section 194N”
He said with this CBDT notification, the government has revised the format of forms 26Q and 27Q, where details of TDS amount deducted and deposited on various resident and non-resident payments are required to be filled.
Amended TDS forms to include TDS on Payment of certain amounts in cash, Commission, Rent, professional fees, interest and Section 194N for cash withdrawals among others.
Form 26Q TDS is used for quarterly filing of TDS returns on any payment other than salary to Indian residents by the government or corporates operating in India.
Form 27Q TDS is used for quarterly filing of TDS returns on any payment other than salary to non- residents, including NRIs and foreigners. Except for government deductors, it is mandatory for all other deductors to mention their PAN in the TDS form.
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