TDS is to be deducted at higher rate if the following conditions are satisfied:

• Deductee has not filed income tax returns for last 2 years.
• Time limit for filing original return has expired.
• The aggregate amount of TDS is Rs. 50,000/- or more in each of the previous 2 years.

If the above conditions are satisfied, then TDS is required to be deducted at twice the rate applicable as per relevant section or 5% whichever is higher. In case PAN of the deductee is not available, TDS shall be deducted at 20% irrespective of the amount & status of filing income tax returns.

The above provisions are not applicable for the following sections:

Section 192 – TDS on salary
Section 192A – TDS on withdrawal from EPF
Section 194B – TDS on winning from lotteries, crossword puzzles, etc.
Section 194BB – TDS on winning from race horses.
Section 194LBC – TDS on income in respect of investment in Securitization Trust
Section 194N – TDS on cash withdrawal

Following confirmation can be obtained from the deductees, whose TDS exceeds Rs. 50,000/- in each of the 2 preceding years, in respect of filing of income tax returns.

To,

(Name of the Payer)

Dear Sir,

Subject: Declaration confirming filing of Income Tax Return for immediate two preceding years

This is in respect to payments due or payments to be made to us for Financial Year 2021-22 (period from 1 April 2021 to 31 March 2022). In this regard, with respect to provision of section 206AB of the Income-tax Act, 1961 (‘the Act’).  I, Ms/Mr/M/s. _________________ in capacity of Self/ Proprietor/ Partner/ Director/ Authorised signatory of _________________ (Name of entity) having PAN ______________ (PAN of Entity) registered office/permanent address at _____________________________________________________ do hereby declare the following

Details of Income tax returns filed are as under

Budget 2020 introduced TCS on Sale of Goods u/s 206C(1H) w.e.f. 1^st October, 2020. This section cast an obligation on the seller to collect tax at source from the buyer. On the similar lines, budget 2021 introduced TDS on Purchase of Goods u/s 194Q. This section casts an obligation the buyer of the goods to deduct tax at source.

Section 206C(1H) w.e.f 1^st October, 2020:

• Applicable to seller whose turnover exceeds Rs. 10 Crores during the preceding FY and sales to a buyer exceed Rs. 50 Lakhs during the current FY.
• This section is applicable only in case of sale by a resident seller to a resident buyer.
• TCS rate is collectible @ 0.10% of the sales above Rs. 50 lakhs to a particular buyer during the current FY. In case buyer does not provide PAN/Aadhar TCS is collectible @1%.
• TCS is collectible at the time of receipt of consideration towards the sale of goods.

This section is not applicable in the following cases:

• Buyer is deducting or liable to deduct TDS under section 194Q or any other section.
• Export/Import of goods.
• Buyer is Central/State Government/ local authority.
• Goods are already covered under the existing provision of TCS

In case of TCS – the value for computing the TCS would be on invoice value including GST or any other tax.

Section 194Q applicable w.e.f 1^st July, 2021:

• Applicable to a buyer whose turnover exceeds Rs. 10 Crores during the preceding FY and the purchases from a particular seller exceed 50 lakhs during the current FY.
• This section is applicable only in case of sale by a resident seller to a resident buyer.
• TDS is deductible @ 0.10% of the purchases exceeding Rs. 50 lakhs during the current FY.
• TDS is deducted on credit or payment whichever is earlier.
• TDS under section 194Q will not be applicable in cases where TDS/TCS is deducted or collected under any other section.
• Where any transaction pertaining to goods attracts provisions of both TDS and TCS, then only TDS provisions would be applicable. Seller is not required to collect TCS.