CBDT issues new functionality “Compliance Check for sections 206AB & 206CCA”

The Finance Act 2021 has introduced two new sections – s. 206AB & s. 206CCA of the Income Tax Act 1961 (‘ITA’) effective from 1st July 2021.

These sections mandate the tax deduction (s. 206AB) or tax collection (s. 206CCA) at a higher rate incase of certain non – filers (specified persons) with respect to tax deductions (other than s. 192, 192A, 194B, 194BB, 194LBC and 194N) and tax collections. Higher rate is twice the prescribed rate or 5%, whichever is higher. Specified person is :

He has not filed income tax returns for two previous assessment years relevant to the two previous year in which tax is required to be deducted/collected. Two previous years are required to be those whose return filing date under s. 139(1) has expired. Aggregate of tax deducted at source & collected at source is INR 50,000/- or more in both these two previous years.

 The tax deductor/collector is required to do a due diligence of satisfying himself if the deductee or collectee is a specified person which is an extra compliance burden. To ease the compliance burden, the Central Board of Direct Taxes (‘CBDT’) is issued a new functionality ‘compliance check for sections 206AB & 206CCA’. This functionality is made available through the reporting portal of the Income – Tax Department. The tax deductor/collector can feed a single PAN (PAN Search) or multiple PANs (bulk search) of the deductee or collectee and get a response if such deductee or collectee is a specified person.