Section 206AB and 206CCA

Income Tax
1

Not filing ITR for two consecutive years comes with its share of consequences.
Getting a notice from ITD is always a possibility. But apart from that Section 206AB and 206CCA Of the Income Tax Act Also comes into play.

What are Sections 206AB and 206CCA?

The introduction of the new section is for the deduction and collection of tax at source at higher rates if the person has not filed their ITR for two previous consecutive years.

Section 206AB deals with the deduction of TDS at a higher rate to those who have not filed their income tax return. Whereas, Section 206CCA deals with the collection of tax at source at a higher rate received from the buyers.

Rate of Deduction u/s 206AB
TDS
Tax will be deducted at the higher of the following rates:

  • At twice the rate specified in the relevant provision of the Act; or
  • At twice the rate or rates in force; or
  • At the rate of 5%

Rate of Deduction u/s 206CCA

Tax will be collected at the higher of the following rates:

  • At twice the rate specified in the relevant provision of the Act; or
  • At the rate of 5%

Applicability of Section 206AB and 206CCA

These sections will not be applicable to a non-resident who does not have a permanent establishment in India. Also, these sections will not be levied on the following incomes as well:

Premature withdrawal of EPF
Winnings from any lottery or card games or crosswords or puzzles
Winnings from any horse race
Income in respect of investment in securitisation trust
Payments of certain amounts/amounts in cash

So, under which circumstances will these sections be applicable?
These sections will apply when

  • Person has not filed their Income Tax Return for two previous years immediately preceding the previous year in which tax is required to be deducted/collected

  • The time limit for filing such ITR u/s 139(1) has expired

  • Aggregate of tax deducted/collected at source in each of these two financial years is INR 50,000/- or more

You can read more about 206AB and 206CCA here

2

Additionally, The new section will be applicable from 1st day of July 2021.

3

Will it be applicable if I forgot to file ITR for any two previous years?

4

Hey Kriti,
These sections will be applicable if you have missed to file your ITR for 2 consecutive years. Hope this helps :slight_smile:

5

It assess download 26as details mentioned below in f.y.20-21.
Sec 206 1G(A)
Name of collector : ICICI Bank Ltd
Amount deposit:1,24,520/-
Total tcs paid:nil
Question:
Assess sec 206 1G(A) rs:1,24,520/- amount how to treatment procedure in books and it returns.

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Hi @Sundaraiah_Kollipara, if the foreign remittance that you have received is from an income, then that amount has to be declared.
If it is not an income, and is something like a transfer of funds or gift from family, the income can be declared under exempt income.