Section 206AB “Special provision for TDS for Non-Filers of Income-Tax (IT) Return

Section is Applicable:

1. If person require to deduct tax under any of provision of Chapter XVIIB Tax Deduction at Sources.

2. Transaction is done with Specified person. (Specified person means a person who have not filed his return of Income of immediately two preceding previous years, for which due date U/s 139(1) has expired.

For Eg. If tax is required to deduct for July 2021, Previous year 2021-22, so for relevant immediately 2 preceding previous years for which ITR filing required to be checked are 2018-19 and 2019-20 (AY 2019-20 and 2020-21 respectively). As the time limit for Preceding Previous Year 2020-21 is not expired

3. Aggregate of tax deducted at source (TDS) and tax collected at source (TCS) in his case is rupees fifty thousand (50,000) or more in each of these two previous years.

Section is Not Applicable:
1. If Specified Person is Non-Resident who does not have a permanent establishment in India.

2. The section has overriding effect on all provisions of Chapter XVIIB of the Income tax Act, 1961 

 Except the Followings:

1.192 TDS on Salary

2.192A TDS on Premature withdrawal from EPF

3. 194B TDS on Lottery

4. 194BB TDS on Horse Riding

5. 194LBC TDS on Income in respect of investment in securitization trust

6. 194N TDS on cash withdrawal in excess of Rs. 1 crore

 Applicable Tax rate :
Tax shall be deducted at Highest of the Followings:

(i) at twice the rate specified in the relevant provision of the Act

or

(ii) at twice the rate or rates in force;

Or

 
(iii) at the rate of five percent.

 If Section 206AA Is applicable to the Specified person than tax shall be deducted at higher of

1. Tax rate as per this Section

Or

2. Tax rate as per Section 206AA

 
New Section 206CCA

 Section 206CCA “Special provision for TCS for non-filers of income-tax return”

Section is Applicable When

1. If person require to deduct tax under any of provision of Chapter XVII-BB Collection at source.

2. Transaction is done with Specified person. (Specified person means a person who have not filed his return of Income of immediately two preceding previous years, for which due date U/s 139(1) has expired.

For Eg. If tax is required to deduct for July 2021, Previous year 2021-22, so for relevant immediately 2 preceding previous years for which ITR filing required to be checked are 2018-19 and 2019-20 (AY 2019-20 and 2020-21 respectively). As the time limit for filing of Previous Year 2020-21 is not expired.

3. Aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.

Note :- One can refer above table for better understanding of applicability.

 Section is Not Applicable :

1. If Specified person is Non-Resident who does not have a permanent establishment in India.

 Applicable Tax rate :

Tax shall be deducted at Higher of the Followings:

(i) at twice the rate specified in the relevant provision of the Act;

Or

(ii) at the rate of five per cent.

If Section 206CC Is applicable to the Specified person, than tax shall be deducted at higher of

1. Tax rate as per this Section ;

Or

2. Tax rate as per Section 206CC

 

Section 206AB : Declaration Format for filing of Income Tax Return for last two years
To,

(NAME OF THE BUYER/ SERVICE PROVIDER)

Dear Madam/Sir,

Subject: Declaration confirming the filing of Income Tax Return for immediate two preceding years

This is in respect to payments due or payments to be made to us for Financial Year 2021-22 (period from 1 April 2021 to 31 March 2022). In this regard, with respect to provision of section 206AB of the Income-tax Act, 1961 (‘the Act’). I, Ms/Mr/M/s. _________________ in capacity of Self/ Proprietor/ Partner/ Director/ Authorised signatory of _________________ (Name of entity) having PAN ______________ (PAN of Entity) registered office/permanent address at _____________________________________________________ do hereby declare the following (Tick as applicable):

Income tax returns filed, details are as under:

Financial Year    Due Date of Filing    Date of Filing    ITR Acknowledgement No.    Remarks

2019-20
 
2018-19

 
I/We hereby declare that I/We am/are duly authorized to give this declaration and the information stated above is true to the best of my/our knowledge and belief. If there is any mis-declaration, I/We undertake to indemnify __________________(Name of the buyer/service provider) for any loss/liability fully including any Tax, interest, penalty, etc. that may arise due to incorrect reporting of the above information.

For ________________ (Name of Entity)

Place: __________________

Date: _________________