Section 206AB: Higher rate of TDS for non filers of ITR - Template of Mail & Declaration

The Government of India has recently made an amendment in the Finance Act 2021 by inserting a new Section 206AB which prescribes higher rate of TDS for those Vendors/ Suppliers who have not filed their Income Tax Return for last 2 years. 

Summary of this amendment is as under

1. All business entity to whom TDS provisions is applicable have to take DECLARATION from each of their Vendor/ Supplier that they have filed their ITR for last 2 years FY 18-19 & FY 19-20.
2. Date of applicability of higher TDS is 1^st July 2021.
3. If the Vendor/ Supplier has not filed ITR  or do not submit declaration  than higher of the following 3 rate will be applicable:-

• twice the rate specified in the relevant provision of the Act; or 
• twice the rate or rates in force; or 
• the rate of 5 per cent 

A sample / template of the mail to be sent to your Vendor/Supplier is given below. You can suitably modify.

.........................................................................................................................................

Dear Mr / Ms/ Mrs .........................(Name of Vendor)

As you are aware, the Government has recently made an amendment in the Finance Act 2021 by inserting a new Section 206AB which prescribes higher rate of TDS  for those Vendors/ Suppliers who have not filed their income-tax returns for last 2 years. 

I am sure you being a law abiding person have filed your Income Tax Return in time. But for our record we need a declaration from you with the date & Acknowledgement No. of ITR filed.   

Date of applicability of higher TDS is 1^st July 2021.

If you  do not submit declaration within a week or you have not filed ITR for last 2 years than higher of the following 3 rate will be applicable:-

• twice the rate specified in the relevant provision of the Act; or 
• twice the rate or rates in force; or 
• the rate of 5 per cent 

You are requested to send us declaration duly signed.

Format of the declaration is attached

DECLARATION ON LETTERHEAD OF VENDOR

Annexure 1

Undertaking pursuant to Section 206AB and Section 206CCA of the Income Tax Act, 1961

To,

CA Ramesh Agrawal
AGRAWAL GUPTA & SAHU
Chartered Accountants
Vasant Kunj, New Delhi

Dear Madam/Sir,

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

Preceding years

I, Ms/Mr/Mrs __________________________________ in capacity of Self/Proprietor/Partner/Director/Authorized signatory of __________________________________ (Name of entity) having PAN ______________ (PAN of Entity) registered office/permanent address at ____________________________________________ do hereby declare that I/We have filed Income Tax Returns for immediately last 2 preceding Financial Years  for which due date to file return of income has not expired as per sub-section (1) of section 139 of the Income Tax Act, 1961 and details of which are as given under:

I/We hereby undertake to indemnify your entity for any loss/liability fully including any Tax, interest, penalty, etc. that may arise due to incorrect reporting of above information.

For ________________ (Name of Vendor Entity)

Signature: ___________________
Name of person signing : _________________
Designation: __________________
Place: __________________
Date: _________________