Section 206AB of the income tax act which will be effective from 01.07.2021
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A new section 206AB in the income tax Act has been introduced which will be effective from 01.07.2021 - as a special provision providing for higher rate of TDS for the non filers of income tax return.
This section impose a higher rate of TDS if the transactions are done with the non filers of income tax return.
Applicability of section 206AB:
Deductor will deduct TDS at a higher rate on any amount paid to the specified person
Following are the specified persons as per section 206AB:
- Person who has not filed income tax return for 2 Years immediately before the previous year in which tax is required to be deducted
- Time limit of ITR filing under section 139(1) is expired
- The aggregate of TDS is Rs. 50000 or more in each of the 2 previous years
Specified person does not include non resident who does not have a permanent establishment in India
Non applicability of section 206AB:
Provision of this section shall not be applicable for such type of transactions where full amount of tax is required to be deducted
- Salary
- Premature withdrawal from employee provident fund
- Winning from lottery, cross word puzzles or card games
- Winning from any horse races
- Income from investment in securitization trust
- TDS on cash withdrawal above Rs. 1 crore
Rate of TDS to be deducted under section 206AB:
- at twice the rate specified in the relevant provison of the act
- twice the rate or rates in force
- at the rate of 5%
What if PAN is not furnished:
- If specified person does not furnish a PAN to the payer than the TDS rate shall be higher of the rate mentioned above or 20%
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