Introduction of Section 206AB of Income tax Act 1961 effected Deduction of Tax at source at higher percentage from specified persons.

Some of the highlights of the Provisions are summarised below.

Effective Date: with effect from 1st July 2021.

Applicability to Specified Persons:
Specified Person – with respect to tax deductions Chapter XVIIB
 Not filed Income Tax returns for the last two years; and
 Aggregate TDS/TCS credit of Rs. 50,000 or more in each of the two years

Rate of Deduction:
Higher of the following rates, namely:—
(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.

Where section 206AA is applicable to a specified person (where no PAN ), Tax shall be deducted at higher of the two rates provided in this section 206AB and in section 206AA .

Non-resident who does not have a permanent establishment in India

Sec 206 AB not applicable to the following Sections:
1. Section 192 : TDS on Salary
2. Section 192A: TDS on withdrawal from EPF;
3. Section 194B: TDS on winning from lotteries, crossword puzzles etc.
4. Section 194BB: TDS on winning from horse races;
5. Section 194LBC: TDS on income in respect of investment in Securitization Trust;
6. Section 194N: TDS on cash withdrawal

CA. SONY C. L. B.Sc.,LL.B.,FCA,DISA,DITL (ICAI) Goods & Service Tax

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