Higher Deduction of TDS - SECTION 206AB w.e.f. 01-07-2021

Government of India vide Finance Act 2021, w.e.f 01/07/2021 has introduced a new section 206AB under the Act wherein a buyer is responsible to deduct TDS at higher rate i.e., twice the applicable rate or at the rate of 5%, whichever is higher, from the seller.

The above provision is applicable in case the buyer has not filed income tax returns for preceding two previous years.

However, this provision is not applicable if Aggregate of tax deducted / collected at source is less than Rs. 50,000 in each of two previous years

The Taxpayers need to identify if the suppliers have filed their income tax returns for last two years.

The readers can download draft of communication to be shared by the taxpayers with their business partners and discharge the liability accordingly.

Communication Regarding deduction of TDS.

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