New functionality issued for compliance checks for Section 206AB & 206CCA of the Income Tax Act

Finance Act, 2021 inserted two new sections 206AB and 206CCA in the Income-tax

Act 1961 which takes effect from 1st day of July, 2021.

These sections mandate tax deduction (section 206AB) or tax collection (section 206CCA) at

higher rate in case of certain non-filers (specified persons) with respect to tax deductions

(other than under sections 192, 192A, 194B, 194BB, I 94LBC and I 94N) and tax collections.

Higher rate is twice the prescribed rate or 5%, whichever is higher.

Specified person means a person who satisfies both the following conditions: -

(i) He has not filed the returns of income for both of the two assessment years

relevant to the two previous years immediately before the previous year in

which tax is required to be deducted Icollected. Two previous years to be

counted are required to be those whose return filing date under sub-section (1)

of section 139 has expired.

(ii) Aggregate of tax deducted at source and tax collected at source is rupees fifty

thousand or more in each of these two previous years.

Now to ease the compliance burden, the CBDT is issuing a new functionality "Compliance check for Sections 206AB & 206CCA".

Features of this functionality are given hereby below:-

-This functionality is made available through reporting portal of the Income-tax Department.

- The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or coIIectee and can get a response from the functionality if such deductee or collectee is a specified person.

Few important key notes:-

- A list of specified persons is prepared as on the start of the financial year 2021-22,

taking previous years 2018-19 and 2019-20 as the two relevant previous years.

- As per sections 206AB & 206CCA of the Income Tax Act, the specified persons shall not include a non-resident who does not have a penmanent establishment in India.

-During the financial year 2021-22, no new names are added In the list of spectfied

persons.

- If any specified person files a valid return of income (filed & verified) for assessment

year 2019-20 or 2020-21 during the financial year 2021-22, his name would be

removed from the list of specified persons. This would be done on the date of fihng of

the valid return of income during the financial year 2021-22.

Circular download :

circular_11_2021_sec 206ab.pdf

Download PDF • 885KB