Section 206AB of Income Tax Act, 1961

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Section 206AB of the Income Tax Act, 1961, introduced special provisions for Tax Deducted at Source (TDS) for individuals who have not filed their income tax returns. This section, effective from 1 July 2021, requires higher TDS rates for specified non-filers. Deductors need to verify if the deductee has filed returns for the two preceding years and if their aggregate TDS and TCS credits exceed Rs. 50,000 in those years. A new online portal, 'Compliance Check for Section 206AB and 206CCA', has been launched by the CBDT to assist deductors in verifying this information using PAN-based or bulk searches.

Bapun Dasgupta

Bapun Dasgupta (Querist)

14 June 2021 With reference to Section 206AB of the Income Tax Act, 1961 (Special provision for deduction of tax at source for non-filers of income-tax return) applicable from 1 July, 2021, what are the documents which the deductor of T.D.S. / payer of the party should ask from the party to whom he will make the payment to ensure that T.D.S. for each of the 2 preceding previous years is below Rs. 50,000/- or how else will the deductor satisfy himself about the fulfilment of the provision of Sec. 206 AB ?

Is the threshold amount of Rs. 50,000/- applicable only to the payments made by a deductor (For example if X pays to Y Rs. 7,20,000/- per annum and deducts tax u/s. 194J @ 10%; the T.D.S. per annum will be Rs. 72,000/-) to the party receiving payment or is it applicable for the total TDS claim made by the deductee as a whole in his return of income (For example, X deducts only Rs. 5,000/- as T.D.S. per annum from Y but Y claims Rs. 70,000/- as T.D.S. in his ROI in view of T.D.S. effected by other parties) ?

Is there any specific declaration form to be obtained from the deductee to this effect ?

Thank you and regards.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

14 June 2021 * IT return filed acknowledgement OR
Declaraton in letter head along woth PAN card copy.

* Total TDS and TCS of the deductee.

* No format specified for declaration.

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Deepa B

Deepa B (Expert)

06 July 2021 A reporting portal with a new functionality called “Compliance Check for Section 206AB and 206CCA" has been launched wherein you can check whether a person to whom you intend to deduct is a specified person or not. Once registered there, you can use either PAN based search or bulk search feature to check whether the assessee is a specified person(i.e., one who has not filed return in preceding two years for which original due dates have already expired) and had aggregate of TDS and TCS credit in excess of Rs.50,000/-. For detailed information on the functionality check CBDT circular 11/2021 dt.21.6.2021 or check the link https://report.insight.gov.in

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