Section 206AB & 206CCA -who will be affected?



Who are to be affected by higher rates under section 206AB and 206CCA? Who is excluded from from section 206AB?

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Section 206AB provides a tax deduction at source (TDS) at rates higher than those prescribed in the Act while making payments or collections to those who have not filed their income tax return.
Similarly, section 206CCA provides a collection of tax at source (TCS) on amounts received from the buyers at rates higher than specified in the Act.

The higher TDS rates are applicable on the deductees:

  1. Who has not filed the returns of income for both of the two assessment years which are immediately before the previous year in which tax is required to be deducted,
  2. The time limit for filing tax return under section 139(1) of the Act has expired for both these assessment years, and
  3. The amount of TDS in each of two assessment years is INR 50,000 or more.

The exclusion from the section 206AB are-

The provisions of deduction of TDS at higher rate shall not be applicable on the following sections:

  1. Section 192 – TDS on Salary
  2. Section 194A – TDS on Premature withdrawal of EPF.
  3. Section 194B – TDS on winnings from lottery
  4. Section 194BB – TDS on winnings from horse races
  5. Section 194LBC – TDS by securitization trust
  6. Section 194N – TDS on cash withdrawal
  7. Non-resident who does not have a permanent establishment in India.
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