Section 206AB and 206CCA are the latest addition to the Income Tax Act. The introduction of the new section is for the deduction and collection of tax at source at higher rates if an amount is paid or payable to the specified person who did not file the income tax return. The new section will be applicable from 1st day of July 2021.
What is Section 206AB and 206CCA?
Section 206AB deals with the deduction of TDS at the higher rate to those who have not filed their income tax return. Whereas, Section 206CCA deals with the collection of tax at source at a higher rate received from the buyers.
Rates for Deduction or Collection of Tax under section 206AB and 206CCA
TDS
Tax will be deducted at the higher of the following rates:
- at twice the rate specified in the relevant provision of the Act; or
- at twice the rate or rates in force; or
- at the rate of 5%
TCS
Tax will be collected at the higher of the following rates:
- at twice the rate specified in the relevant provision of the Act; or
- at the rate of 5%
Applicability of Section 206AB and 206CCA
The section 206AB and 206CCA are not applicable to a non-resident who does not have a permanent establishment in India. Furthermore, provisions of section 206AB do not apply to any sum or income or amount paid or payable or credited on which tax is otherwise deducted at source under below-mentioned provision of Chapter XVIIB:
- Section 192 – Salary
- Section 192A – Premature withdrawal of EPF
- Winnings from any lottery or card games or crosswords or puzzles – Section 194B
- Winnings from any horse race – Section 194BB
- Section 194LBC – Income in respect of investment in securitisation trust
- Section 194N – Payments of certain amount/amounts in cash
The section 206AB and 206CCA are applicable to specified persons:
- Person has not filed their Income Tax Return for two previous years immediately preceding the previous year in which tax is required to be deducted/collected
- The time limit for filing such return of income u/s 139(1) has expired
- Aggregate of tax deducted/collected at source in each of these two financial years is INR 50,000/- or more
FAQs
The DTAA provides for a rate of 10% whereas as per the provisions of Section 206AA of the Act, the rate of tax deduction at source is 20%. The plea of the revenue was that section 206AA starts with a non-obstante clause and therefore it overrides all other provisions of the Act including 90(2), 115A and 139A.
Section 206AA requires every taxpayer who receives taxable income to furnish their PAN to the payer of such income. This applies to both the resident as well as non-resident recipients.
Additionally, The new section will be applicable from 1st day of July 2021.
Hey Kriti,
These sections will be applicable if you have missed to file your ITR for 2 consecutive years. Hope this helps
It assess download 26as details mentioned below in f.y.20-21.
Sec 206 1G(A)
Name of collector : ICICI Bank Ltd
Amount deposit:1,24,520/-
Total tcs paid:nil
Question:
Assess sec 206 1G(A) rs:1,24,520/- amount how to treatment procedure in books and it returns.
Hi @Sundaraiah_Kollipara, if the foreign remittance that you have received is from an income, then that amount has to be declared.
If it is not an income, and is something like a transfer of funds or gift from family, the income can be declared under exempt income.