- Date : 02/07/2021
- Read: 4 mins
If you have not filed your Income Tax return in the last two years, you may end up with double tax deductions.
From 1 July 2021 several changes have become applicable for bank account holders and taxpayers. These include higher rates of TDS and TCS in selected cases and various bank charges across a few specific banks. The tax-related changes are in line with the announcements made by Finance Minister Nirmala Sitharaman in her Union Budget presentation earlier this year.
Among the key changes are:
- Higher TDS and TCS for non-filers: From 1 July 2021, a higher rate of TDS and TCS will be applicable for taxpayers who have not filed their Income Tax Returns. This increased rate will be applicable if the taxpayer has not filed ITR in the last two assessment years, and has an aggregate deduction of Rs 50,000 or more in each of the last two previous years.
- TDS on purchase of goods: Buyers will now be required to deduct a TDS of 0.1% on payments made to a seller, on such sums that exceed Rs 50 lakhs in value. Notably, the Finance Act of 2021 introduced section 194Q for deducting TDS on payments for the purchase of goods.
- SBI cash withdrawal limit: SBI’s Basic Savings Bank Deposit (BSBD) account holders will have to pay Rs 15 (excluding GST) on ATM cash withdrawals if they withdraw more than four times a month. In other words, the account holders are eligible for four free cash withdrawals each month from an ATM of SBI or any other bank.
- SBI cheque book charges: SBI BSBD account holders will have ten cheque leaves free in a financial year. An additional 10-leaf cheque book will cost Rs 40 plus GST, while a 25-leaf cheque book will cost Rs 75 plus GST. An emergency cheque book of ten leaves or part thereof will cost Rs 50 excluding GST.
- Syndicate Bank IFSC code: Due to the merger of Syndicate Bank with Canara Bank, the IFSC codes of Syndicate Bank branches will change from 1 July 2021.
- Andhra and Corporation Bank cheque books: Due to the merger of Andhra Bank and Canara Bank with Union Bank last year, account holders of both the banks will have to use new cheque books with added security features. The existing cheque books are now invalid.
Why is the new TDS/TCS rule being introduced?
Apart from nudging non-filers towards ITR filing, the new TDS/TCS rule will seek to ease out the compliance burden of the TDS deductor. CBDT has introduced a new utility tool named ‘Compliance Check for Section 206AB and 206CCA’. This is already in practice in the IT department’s reporting portal. The deductor can look up a person’s PAN in the tool to find out if the person is a specified person. Such a person will accordingly be subject to higher tax deductions.
What is the higher rate of TDS to be deducted in the case of non-filers?
If you are a non-filer with more than the aforementioned TDS/TCS, you will see twice the rate of tax deducted for the specified transactions. Payments like salary, provident fund withdrawal, and income from lottery and racehorses are excluded from this rule.
Which public sector banks have merged?
Banks with weak financial performance are being merged with ‘anchor’ banks which are better performers, to improve their financials. This seems to have worked well, with merged banks showing better results as compared to the pre-merger results.
Prominent mergers include:
- Andhra and Corporation Bank’s merger with Union Bank,
- Oriental Bank of Commerce and United Bank of India’s merger with Punjab National Bank,
- Syndicate Bank’s merger with Canara Bank,
- Allahabad Bank with Indian Bank, and
- Dena and Vijaya Bank’s merger with Bank of Baroda.
RBI gives digital payment apps a boost: ATM cash withdrawals and NEFT/RTGS allowed