Hero Image

Relief for these non-ITR filers from higher TDS in budget 2023

There may be some individuals who are not obligated to file their income tax return (ITR), however, these individuals cannot be classified as non-filers. As a result, Union Budget 2023 has proposed to change the definition of the "specified person" in sections 206AB and 206CCA of the Income tax Act, 1961 to exclude a person who is not required to submit a return of income for the assessment year relevant to the said previous year.



Note that this amendment will take effect from 1st April, 2023.
According to the Union Budget 2023 memorandum, “These sections define “specified person” to mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted or collected (as the case may be)-
· for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired; and
· the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in the said previous year.
The provison to these definitions exclude a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India.

Earlier, if you haven't submitted your income tax return for the said relevant year, you will be included to the list of non-filers and subject to a larger tax deduction at source.

According to the circular, if the ITR was not filed for the relevant previous fiscal year and the aggregate TDS and tax collected at source exceeded Rs 50,000 that year, it would attract a high TDS. Banks will be required to check if an individual has met both conditions to attract a higher TDS.

Relief from special provision for higher rate of TDS/TCS for non-filers of income-tax returns Section 206AB of the Act provides for special provision for higher TDS for non-filers of income-tax returns. Similarly, section 206CCA of the Act provides for special provision for higher TCS for non-filers of income-tax returns.

These non-filers in these sections are referred to as “specified person”. 2. These sections define “specified person” to mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted or collected (as the case may be)-
(i) for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired; and
(ii) the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in the said previous year.

3. The provisos to these definitions exclude a non-resident from the definition of specified person, if the non-resident does not have a permanent establishment in India.

4. There may be certain persons who are not required to furnish the return of income.

It is not the intention to include such persons in the category of non-filers. Hence, in order to provide relief in such cases, it is proposed to amend the definition of the “specified person” in sections 206AB and 206CCA of the Act so as to exclude a person who is not required to furnish the return of income for the assessment year relevant to the said previous year and who is notified by the Central Government in the Official Gazette in this behalf. This amendment will take effect from 1st April, 2023”.

READ ON APP