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Section 206AB of Income-tax Act : Important points in brief:
Mandates deduction of tax at higher rates
based on the status of compliance of tax returns filing by the taxpayers.
Applicable with effect from 1
July 2021.
Applicable
to Section 194C 194J 194I 195 etc.
Applicable
rate of TDS when section 206AB becomes applicable: Higher
of the following rates:
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(a)
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Twice
the rate specified in the relevant provision of the Act;
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(b)
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Twice
the rate or rates in force; or
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(c)
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5%.
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Basic years to check applicability of
the section as on 01 07 2021: two PYs i.e. FY 2018-19 and FY 2019-20 are
relevant PYs for checking the applicability of Section 206AB as of 1 July
2021. This will be fix for the year.
Not applicable to : Section 192 – TDS on salary Section 192A – TDS on
withdrawal from EPF etc etc
Not applicable : Provisions of Section 206AB would not be
applicable if payment is below
threshold limit as per respective section
Not
applicable : If assessee has filed the tax return
for one of the years out of 2 basic years in question.
Not
applicable : When the TDS is less than INR 50000
in one of the two applicable PYs and the Tax deductee has not filed the tax
returns for both the applicable PYs this section would not be applicable since
the Section requires the aggregate of TDS and TCS to be INR 50000 or more
in each of the
applicable PYs.
Not applicable : To a non-resident who does not have a
"permanent establishment" (PE) in India is outside the purview of applicability
of Section 206AB.
Applicable rate when PAN not provided : The
tax shall be deducted at the rates provided in this Section or in Section
206AA whichever is higher.
No minimum threshold given for
applicability of this Section from deductor point of view/ deductor liability
fixation.
Non compliance implications/ penalty:
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?
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Classification
as "assessee in default" in terms of Section 201 of the Act
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?
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Interest
in terms of Section 201(1A) of the Act
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?
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Penalty
in terms of Section 221 of the Act
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?
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Penalty
in terms of Section 271C of the Act
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?
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Where
there is said to be a short-deduction of tax due to trigger of Section
206AB potentially disallowance of expense in terms of Section 40a(ia) of
the Act
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?
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Disclosure
in Clause 34 of Form 3CD
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STEP: Registration on reporting portal
login verification. Please keep PAN number list ready so that section
applicability could be checked as soon as link on income tax portal is
activated by dept.
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