What are sections 206AB and 206CCA and 194Q?

What are sections 206AB and 206CCA and 194Q?

Finance Act 2021 introduced Sections 206AB and 206CCA, levying a double TDS rate for the non-filers of ITR of two previous years. It’s applicable when the total TDS deducted or collected exceeds Rs. 50,000. This section applies to all payments except salaries, premature withdrawal of PF, and a few more.

Everything you need to know regarding Sections 206AB and 206CCA


With an intent to penalize the non-filers of the income tax returns, CBDT introduced new Sections, namely, 206AB and 206CCA. 


What are Sections 206AB and 206CCA? 

Section 206AB is a newly introduced section to deduce a higher TDS rate for non-filers of income tax returns. Similarly, Section 206CCA is introduced newly for tax collection at a higher percentage on payments made to ‘specified person.’


When do these provisions apply?

The Union Budget 2021 introduced Sections 206AB and 206CCA, applicable from 1st July 2021. 


What is the TDS/TCS Deduction rate?

As per Section 206AB, any person making payment to ‘specified person’ (explained below) shall be liable to deduct TAX at the higher of the following rates:

  • Double the specified rate as per the Income Tax Act.
  • Twice the rate/rates in force (if updated by CBDT).
  • At 5% rate.


As per the Section 206CCA, any person making payment to ‘specified person’ (explained below) shall be liable to collect TCS at the highest of the given rates:

  • Double the specified rate as per relevant provisions of the Income Tax Act.
  • At the rate of 5%.


In addition to the non-filing of ITR, if the specified person does not furnish PAN, then the TDS/TCS rate shall be more than the rates given in this section or the Sections 206AA and 206CC.


Who will pay a higher TDS/TCS under Sections 206AB and 206CCA?

A ‘specified person,’ as mentioned under these sections, is someone who fulfills the given conditions:

  • The total deduction and collection of TDS and TCS (in the case of the specified individual) are Rs. 50,000 or more in the previous two financial years. 
  • He/She has not filed Income Tax Return for the last two years.
  • The due dates of their Tax Return filing of the previous years have expired. 

It does not apply to an NRI that does not have a permanent establishment in India. 


To ensure compliance with Sections 206AB and 206CCA, call us at 8961228919, or write to us at support@taxaj.in.



What are the few exemptions applicable under Section 206AB?

It is applicable in all cases except the following circumstances:

Section         Description

192                 Salary

192A              Premature withdrawal from the accumulated provident fund, which is taxable in the employee’s hands

194B              Winning & gains from the card game, crossword, lottery, puzzle, or any other games

194BB           Winning & Gains from a horse race

194LBC         Income from investment in the securitization trust

194N             Payments of specific amount/amounts in cash



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