Changes in TDS and TCS 

The Finance Act has introduced significant changes in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) through new sections such as Section 194Q, Section 206AB, and Section 206CCA.

Section 206AB targets non-filers of Income Tax Returns (ITR) for the past two years, imposing a higher TDS rate. It applies to both residents and non-residents with a Permanent Establishment in India. Non-compliance attracts interest charges and expense disallowance. Quarterly TDS returns (Form 26Q/27Q) must be filed, with Form 16A issued within 15 days.

Similarly, Section 206CCA enforces TCS on non-filers of ITR for two years, with higher rates applicable. Like Section 206AB, it also applies to residents and non-residents with a Permanent Establishment in India. Non-compliance incurs interest charges. Quarterly TCS returns (Form 27EQ) must be filed, with Form 27D issued within 15 days.

These amendments aim to broaden tax compliance and deepen the tax net, effective from July 01, 2021. Compliance with these provisions is essential to avoid penalties and ensure smooth tax operations.