Maharishi & Co.

Chartered Accountants
"Aparna", Behind Jivandeep Hospital, Limda Lane, Jamnagar 361 001 Gujarat, India
Tel : +91 - 288 - 2665023 - 2665024, 2662637
e-mail : info@jainandmaharishi.com

TDS /TCS changes applicable w.e.f. July 1, 2021

Vide Finance Act, 2021 some changes have been made in the provisions of TDS/ TCS which will come
in force with effect from 01.07.2021. The changes are as follows:

Section 194Q & Section 206C(1H):

• As per Section 194Q, tax is to be deducted by persons whose total sales, gross receipts or
turnover exceeds Rs. 10 Crore during the financial year immediately preceding the financial
year at 0.1 percent from the payment made to seller on purchase consideration paid or
credited to him on the amount exceeding Rs. 50 lacs in the financial year. If the Seller has not
provided Permanent Account Number (PAN) or Aadhar Number to the buyer then the TDS
would be deducted at 5 percent instead of 0.1 percent.

• In case tax is deductible under section 194Q of the Act by the buyer, Seller shall not collect TCS
under section 206C(1H).

Section 206AB & 206CCA:

• New sections 206AB and 206CCA have been introduced providing that every person liable to
deduct / collect tax at source has to collect information from the deductee that if in his case
amount of TDS / TCS in last two previous years has been Rs. 50,000/- or more, whether he has
filed returns of income for those assessment years. In case returns have not been filed by him
for both the assessment years rate of TDS / TCS will be higher of the following rates: -

o Twice the rate as specified in the tax law, or

o Twice the rate or rates in force, or
o Rate of 5 percent.

• Provisions of above sections are not applicable only if tax is deductible under sections

o 192 (Salaries),
o 192A (Payment of accumulated balance from PF),
o 194B (Winning from lottery or cross word puzzle),
o 194BB (Winning from horse race),
o 194LBC (Income in respect of investment in Securitization Trust) and
o 194N (tax on cash withdrawals from banks)

Details of Information required:

• In view of above amendments, tax deductors/ tax collectors will have to collect information /

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 Maharishi & Co.
Chartered Accountants
"Aparna", Behind Jivandeep Hospital, Limda Lane, Jamnagar 361 001 Gujarat, India
Tel : +91 - 288 - 2665023 - 2665024, 2662637
e-mail : info@jainandmaharishi.com

take declaration from each of the vender / supplier / seller / buyer and persons from whose
income tax is required to be deducted w.r.t. applicability of provisions of section 194Q or
206C(1H) of the Act so that proper modification can be made in accounting software in order
to deduct / collect tax as per correct provisions of law.

• Information has also to be obtained in respect of PAN and filing of returns for last two
assessment years i.e. 2019-20 and 2020-21. Similarly, assessees will also have to provide
information regarding PAN and filing of returns for assessment years 2019-20 and 2020-21 to
all the persons who are liable to deduct / collect tax from income / payments to be made or
credited to the assessee during the current financial year.

Suggested draft of letters/ declarations:

Suggested draft of letters / declarations to be issued or to be given by each assessee have been
prepared and same are attached herewith for your reference as per details given below:

a) Draft of letter to be issued to buyers asking them if their turnover in FY 2020-21 has been
more than Rs.10 Crores and tax is deductible by them under section 194Q of the Act from
payments of purchase consideration to be made by them exceeding Rs. 50 lacs, so that tax is
not collected under section 206C(1H) of the Act. Draft of declaration to be given by buyers is
also being given. (Annexure-A)

b) Letter to be issued to venders / suppliers / sellers for the purpose of applicability of

provisions of Sections 194Q and stating that tax will be deducted under above section and
therefore, no action be taken by them under section 206C(1H) of the Act, if applicable to
them. Draft of declaration to be given by venders/ supplier/ sellers is also being given.
(Annexure-B)

c) Letter is to be issued by each deductor to all the persons from whose income tax is required
to be deducted / collected requiring them to give information regarding PAN and filing of
returns of income for A.Y. 2019-20 and 2020-2021. Draft of declaration to be given by the
concerned persons is also being given. (Annexure-C)

d) Declaration to be given by each assessee to all the persons who are liable to deduct / collect
tax at source from payments / income of the assessee giving information regarding PAN and
filing of returns of income by your company for A.Y. 2019-20 and 2020- 2021. (Annexure-D)

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