CBDT Circular regarding use of functionality under section 206AB and 206CCA of the Income-tax Act – 1961
Finance Act, 2021 inserted two new sections 206AB and 206CCA in the Income-tax Act, 1961 which were effective from 1st day of July, 2021. Both this sections mandated 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 and tax collections. Higher rate was twice the prescribed rate or 5%, whichever is higher. It may be recalled that Finance Act 2022 has brought the following changes in the said sections:
A) The above provision u/s 206AB is not applicable on tax deductions for 194-IA, 194-IB and 194M in addition to earlier non-applicable sections – 192, 192A, 192B, 192BB, 194LBC and 194N.
B) The specified person’s definition is modified as – “Specified person means a person who satisfies both the following conditions:
1. One who has not furnished the return of income for one financial year, whose return filing date is expired, immediately preceding the financial year when the tax is to be deducted or collected.
2. Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in that previous year.”
C) Further, 206AB will not apply in case of tax deduction on transfer of Virtual Digital Assets u/s 194S to an individual or HUF to whom tax audit is not applicable, or to such person who does not have “Profit and gains of business or profession”.
In order to ease this compliance burden the Income-tax Department has come out with functionality “Compliance Check for Section 206AB & 206CCA” on the reporting portal of the Income tax department.
All other contents of Circular No.11 of 2021 continues to apply.
The copy of the recent circular is as under:
