Section 206AB and 206CCA: Higher TDS and TCS

Section 206AB [For TDS] and 206CCA [For TCS] have been newly inserted by Finance Act, 2021. These have been inserted for imposing higher TDS/TCS rates on non-filers of tax returns aka a specified person.

Effective Date

Section 206AB and 206CCA is applicable from 1st July 2021.

Applicable For

This section is applicable to a specified person only.

A person will be considered as a Specified person if:

1. He has not filed the returns of income for the last two consecutive years and the due date has expired.

AND

2. His TDS and TCS is Rs.50,000 or more in each of the last two consecutive years.

#Not applicable to a non-resident who does not have a permanent establishment in India.

For TDS deductor and TCS collector

Every TDS deductor is required to deduct TDS at the higher of the following rates-

1. at twice the rate specified in the relevant provision of the Act; or
2. at twice the rate or rates in force; or
3. at the rate of 5%.

In case the PAN card is not furnished, the TDS rate will be higher of the following rates-

1. at twice the rate specified in the relevant provision of the Act; or
2. at twice the rate or rates in force; or
3. at the rate of 5%; or
4. at the rate of 20%.

Every TCS collector is required to collect TCS at the higher of the following rates-

1. at twice the rate specified in the relevant provision of the Act; or
2. at the rate of 5%.

How to Identify Specified Person

In order to identify a specified person, the deductor needs to login into the reporting portal.

Upon clicking Compliance Check for Section 206AB & 206CCA on the home page, the compliance check
functionality page appears. Through the functionality, tax deductors or collectors can verify if any
person (PAN) is a “Specified Person” as defined in Section 206AB & 206CCA.
The same can be done in two modes:
1. PAN Search: To verify for a single PAN
2. Bulk Search: To verify for PANs in bulk

Not Applicable to

1. Section 192: TDS on Salary;
2. Section 192A: TDS on withdrawal from EPF;
3. Section 194B: TDS on winning from lotteries, crossword puzzles, etc.
4. Section 194BB: TDS on winning from racehorses;
5. Section 194LBC: TDS on income in respect of investment in Securitization Trust;
6. Section 194N: TDS on cash withdrawal

🙂 Happy Learning