CBDT notifies Compliance Check functionality for Sections 206AB & 206CCA

Finance Act, 2021 inserted two new sections 206AB and 206CCA in the Income-tax Act 1961 (hereinafter referred to as “the Act”) which takes effect from 1^st day of July, 2021.

These sections mandate tax deduction (section 206AB) or tax collection (section 206CCA) at higher rate in case of certain non-filers (specified persons) with respect to tax deductions (other than under sections 192, 192A, 194B, l94BB, l 94LBC and 194N) and tax collections.

Higher rate is twice the prescribed rate or 5%, whichever is higher. Specified person means a person who satisfies both the following conditions:

• 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.
• Aggregate of tax deducted at source and tax collected at source is rupees fifty  thousand or more in each of these two previous years.

Compliance check functionality by the CBDT

1. It can be seen that the tax deductor or the tax collector is required to do a  due diligence of satisfying himself if the deductee or the collectee is a specified person. This can lead to extra compliance burden on such tax deductor or tax  collector.
2. To  ease  this compliance burden the Central Board of Direct Taxes is issuing a new functionality “Compliance Check for Sections 206AB & 206CCA”.
3. This functionality is made available through reporting portal of the Income-tax Department.
4. 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.
5. For PAN Search, response will be visible on the screen which can be downloaded in the PDF formant.
6. For Bulk Search, response would be in the form of downloadable file which can be kept for record.

Please click here to read the entire CBDT circular in this regard.circular_11_2021