Section 206AB and Section 206CCA are two Special provisions for non-filers of Income-tax return, introduced in Union Budget 2021.
Section 206AB
Special provision for deduction of tax at source for non-filers of income tax return.
Meaning of the term “Specified Person”
- It 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.
- For which the time limit of filing return of income under sub-section (1) of section 139 has expired; and
- The aggregate of tax deducted at source and tax collected at source in his case is Rs. 50,000 or more in each of these two previous years:
Note: Specified Person shall not include a Non-Resident who does not have a permanent establishment* in India.
*The term “Permanent Establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.’.
Explanation
where tax is required to be deducted at source (other than sections 192, 192A, 194B, 194BB, 194LBC or 194N) on any sum or income or amount paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted at the 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 5%.
If the provisions of section 206AA (Requirement to furnish Permanent Account Number) is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA.
This Section will take effect from 1st July, 2021.
Section 206CCA
Special provision for collection of tax at source for non-filers of income-tax return.
Meaning of the term “Specified Person”
- It 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 collected.
- For which the time limit of filing return of income under sub-section (1) of section 139 has expired; and
- The aggregate of tax deducted at source and tax collected at source in his case is Rs. 50,000 or more in each of these two previous years:
Note: Specified Person shall not include a Non-Resident who does not have a permanent establishment* in India.
*The term “Permanent Establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.’.
Explanation
Where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collectee) from a specified person, the tax shall be collected at the higher of the following two rates, namely:––
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at the rate of 5%.
If the provisions of section 206CC (Requirement to furnish Permanent Account number by collectee) are applicable to a specified person, in addition to the provisions of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.
This Section will take effect from 1st July, 2021.
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