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Your responsibility and obligations are further expanded.


Now you are not just required to know the TDS Rates but are also required to know the Tax Compliance Status of your Vendors & Suppliers before you think of deducting Tax at Source.

NEW NORMS for deduction of TDS shall be applicable from 01.07.2021

Now that you know about the changes, the next Question arises is HOW will these changes affect us ?

The above 2 mandates when construed in harmony with Section 206AA of the Income Tax Act, 1961 lead to the following conclusion:

  1. Non Linking of PAN with Aadhaar shall be deemed equivalent to not providing PAN for the purpose of TDS and accordingly TDS @20% shall be deducted in the case of such assesse (as per Section 206AA of the Income Tax Act).
  2. In cases wherein the provisions mentioned above (in Section 206AB) are not fulfilled, the deductor is liable to deduct TDS at higher of the following rates:
    • at twice the rate specified in the relevant provision of the Act or
    • at twice the rate or rates in force or
    • 5%

NOW, coming to most important part… What needs to be done in order to remain compliant with these changes ?

Based on the above new provisions, tax experts at DBC advise that it would be prudent for all the deductors to request their sellers/vendors/suppliers to provide a declaration on their respective letterheads to the below effect :

  1. Whether ITR u/s 139 of the Act for the previous 2 Assessment Years has been filed.
  2. Whether aggregate of TDS & TCS is > Rs. 50,000 in each of these 2 years.
  3. Whether they have linked their PAN with Aadhaar by 30.06.2021

DBC Blog Readers may use this Declaration Format for obtaining the above information from their clients : DECLARATION