The Central Board of Direct Taxes (CBDT) issued the Circular No. 11/2021 and Order u/s138(1)(a)(i) dated 21/06/2021 regarding the use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961.
The new tool (Compliance Check for Sections 206AB & 206CCA) eases the burden to check whether a person is a filer or a non-filer in order to determine whether the higher rate of TDS or TCS under section 206AB and section 206CCA shall be applicable to a person being the deductee. Higher rate is twice the prescribed rate or 5%, whichever is higher.
The provisions give a list of conditions to be considered for a “specified person” who covered under these sections for higher deduction of TDS/ TCS:
(i) He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted/collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of section 139 has expired.
(ii) Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.
This functionality has been made available through reporting portal of the Income-tax Department. The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response from the functionality if such deductee or collectee is a specified person. For PAN Search, response will be visible on the screen which can be downloaded in the PDF fonnant. For Bulk Search, response would be in the Conn of downloadable file which can be kept for record.
The deductor or the collector may check the PAN in the functionality at the beginning of the financial year and then he is not required to check the PAN of non-specified person during that financial year.
However, in case a person is flagged as a non-filer i.e: specified persons then there will be need to recheck at the time of making tax deduction or tax collection since he may become a filer at a later part of the financial year.
It may be pertinent to note that during the financial year 2021-22, no new names are added in the list of specified persons which can be referred as a taxpayer friendly measure to reduce the burden on tax deductor a collector of checking PANs of non-specified person more than once during the financial year.
This Article was authored by Tushant a passionate blogger by .
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