Home > Income Tax > Help Center > Higher TDS for non-filers Last Updated: Nov 17th 2022
To bring more people and entities under the tax net, the Finance Bill 2021 has proposed for insertion of 2 new sections under Income Tax Act, 1961. Section 206AB and 206CCA are effective from 01st Jul 2021
Section 206 AB (TDS) : The Tax needs to be deducted on any amounts (income or sum) paid or payable by a person (Payer or Deductor) to a specified person (Payee or Deductee)
Section 206 CCA (TCS) : The Tax needs to be collected at Source (TCS) on any amounts (income or sum) received by a person from a specified person.Note: The above sections will be attracted only if the tax is deductible under TDS provisions
The following are the specified persons to whom the TDS needs to be deducted or TCS to be collected.
EXCEPTION: Specified Person does not include non-residents who does not have a permanent establishment in India.
Note: As these sections are effective from 01st Jul 2021, the deductor or collector are under obligation to check the return filing status of specified person for AY 2019-20 and AY 2020-21 for the payments upto 31st Mar 2022. For Payments after 31st Mar 2022, AY 2020-21 and AY 2021-22 returns status needs to be verified
New Income Tax Portal is expected to facilitate PAN number search to identify whether a supplier / entity has filed their ITR during past two years.
Section 206AB and 206CCA does not apply to the following payments
The rates of tax deduction in such cases shall be higher of the following rates -
Krishna Pvt Ltd is paying a rent of Rs. 3,60,000 per annum to Mr Arjun for the current financial year. The TDS rate u/s 194I is 10% on Rs. 3,60,000 i.e., Rs. 36,000
Mr Arjun did not file the Income Tax returns for AY 2019-20 and AY 2020-21. Krishna Pvt Ltd should deduct the TDS at following rates whichever is higher
In this case, Krishna Pvt Ltd should deduct TDS @ 20% on payments made to Arjun
Note: if PAN is not furnished by Arjun, TDS needs to be deducted @ 20% or twice of rate mentioned in Section u/s 206AA
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