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CBDT issues functionality to check the compliance of Section 206AB and 206CCA

extension of form 10a / 10ab

The Central Board of Direct Taxes (CBDT) has issued the circular no. 11/2021 on 21st June 2021 in which it has been clarified that in order to ensure the due diligence process on account of the tax deductor / tax collector to ensure the compliance of Section 206AB and 206CCA. A new functionality has been introduced in the Reporting portal. This will enable the tax deductor / collector to check whether the persons of whom tax is required to be deducted / collected has filed their respective Income tax returns for earlier 2 previous years or not.

Section 206AB and 206CCA says that the tax shall be deducted at “Higher rate which is twice the prescribed rate or 5%, whichever is higher” in respect of the specified persons who satisfies both the following conditions:-

a. He has not filed the return of income for both of the 2 AY relevant to the 2 PY immediately preceding the current FY in which the tax is required to be deducted / collected. For this, 2 PY are those of whom the time limit u/s. 139(1) for filing the Income tax return has expired.

b. Aggregate of tax deducted and tax collected is Rs. 50 thousands or more in each of these 2 previous years.

Now to check the applicability of this section, the tax deductors / collectors are following the practice of collecting the declaration of the Payee / Buyers in which it has been declared by them that they have filed the Income tax returns for the 2 previous AY along with their acknowledgement numbers.

To reduce the compliance burden, the Income Tax Department has launched the new functionality in which the tax deductor / tax collector has to punch the PAN of the requisite person or it can be done through the Bulk check option in which the response shall be displayed in the downloadable file which can be saved for record purpose.

Overall it is a welcome step by the Department to reduce the unnecessary compliance burden on the Tax Deductor / Collector as the collection of declarations from the vendors is quite a lengthy job in order to ensure the compliance of Section 206AB and 206CCA.

To view and download the Circular, click here Circular



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