New TDS section – Sections 206AB and 206CCA – TDS / TCS at higher rates – effective 1 July 2021

Sections 206AB and 206CCA – TDS / TCS at higher rates 

The Govt has inserted two new sections, namely, 206AB / 206CCA, in the Income Tax Act which are effective from 1 July 2021.

These sections require the deductor of tax (FK entities in this case) to deduct TDS / collect TCS at a higher rate in respect of those persons who are non-filers of income tax return (ITR) in the past 2 years and have TDS and TCS exceeding Rs 50,000 in each of the preceding 2 years.

The government has released a utility to check the compliance status under these sections, if you are tagged as non-compliant (Specified person) as per the utility, we will be obligated to deduct/collect tax at a higher rate (as prescribed under the law).

In the event that you are liable to deduct TDS / collect TCS from us, we confirm that we have filed ITR’s for the last 2 years within the prescribed due dates. Therefore, request you to not deduct/collect tax at higher rates.

Note: In an event that the Govt defers/changes the implementation date from 1st July 2021 to any later date, the provisions of this section along with the above positions will be applicable from such other date as notified by the Government.