(Q1.)What is Section 206AB/206CCA?
- Under Section 206AB/206CCA of Income Tax Act, 1961, it is mandatory for Deductor/Collector to deduct/collect the tax from "Specified Person" at the higher rate as per the provisions of these sections.
Note: Section 206AB is for TDS and 206CCA is for TCS. (Q2.)Who will be the "Specified Person"?
- "Specified Person" means a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be deducted/collected, for which the time limit of filing return of income under section 139 (1) has expired; and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.
Note: The "Specified Person" shall not include a non-resident who does not have a permanent establishment in India. "Permanent establishment" includes a fixed place of business through which the business of the enterprise is wholly or partly carried on. (Q3.)From when Section 206AB and 206CCA will be effective?
- Section 206AB and 206CCA are effective from 1st July 2021.
(Q4.)Who will be covered under Section 206AB/206CCA, in case of valid PAN?
- Valid PAN of company and Non Company will be covered under section 206AB/206CCA i.e. PAN having Fourth character P, H, C, F, A, T,B,L, G, J will be covered.
(Q5.)What will be the higher rate of tax needs to be deducted under section 206AB?
- The tax shall be deducted at the higher of the following rates: -
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at twice the rate or rates in force; or
(iii) at the rate of five per cent.
Note:
1. Section 206AB will be applicable on Valid and Invalid PAN.
2. In case of PAN not available/Invalid PAN, Higher Rate between Sec-206AA (existing) and 206AB will be applied. (Q6.)What will be the higher rate of tax needs to be collected under section 206CCA?
- The tax shall be collected at the higher of the following rates: -
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at the rate of five per cent.
Note:
1. Section 206CCA will be applicable on Valid and Invalid PAN.
2. In case of PAN not available/ Invalid PAN, Higher Rate between Sec-206CC (existing) and 206CCA will be applied. (Q7.)What are the types of transaction on which Section 206AB and 206CCA will be applicable?
- Section 206AB and 206CC will be applicable on all nature of payments or goods and services for e.g. Payment to contractors, commission, fee for technical services etc.
Note:
1. Section 206AB will be applicable to all section of TDS except section 192, 192A, 194B, 194BB, 194LBC or 194N.
2. 206CCA will be applicable to all section of TCS. (Q8.)How to identify the applicability of Section 206AB/206CCA in Form Type- 26Q, 27Q& 27EQ?
- New flags have introduced for identification of applicability of section 206AB/206CCA are as follows:
In Form Type 26Q: flag-"U" has introduced and accordingly higher rate will be charged as per Section-206AB.
In Form Type 27Q: flag-"J" has introduced and accordingly higher rate will be charged as per Section-206AB.
In Form Type 27EQ: flag-"I" has introduced and accordingly higher rate will be charged as per Section-206CCA.
Note: For more details Please refer Notification number 71/2021 available at www.incometaxindia.gov.in
