CBDT compliance check for Section 206AB and Section 206CCA of Income Tax Act.

1. Guidance on
Implementation of Section
206AB & 206CCA

2. Text of Section 206AB
Insertion of 206AB (TDS) vide Finance Act, 2021
• W.e.f. 1st July, 2021; Where tax is being deducted under the provisions of Chapter XVIIB from a specified person.
• Specified person means, a person who has not filed the returns of income for both of the two assessment years relevant to
the two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time
limit of filing return of income under section 139(1) has expired; and the aggregate of tax deducted at source and tax
collected at source in his case is rupees fifty thousand or more in each of these two previous years
Tax is to be deducted at a higher of the following rates :
• at twice the rate specified in the relevant provision of the Act or
• at the rate of 5%
Exceptions to 206AB:
• This provision does not apply in the following cases:
• (i) Where such sum ( or income or amount) is paid (or payable or credited) to a non resident who does not have a
Permanent Establishment (PE) in India. PE includes a fixed place of business through which the business of the enterprise is
carried on, whether wholly or partly; or
• (ii) Tax deductible under provisions of 192 (Salaries), 192A (Payment of PF balance to employees), 194B (Winnings from
lottery or crossword puzzle), 194BB (Winnings from Horse race), 194LBC (Income in respect of investment in securitization
trust) or 194N (Payment of certain amounts in cash).

3. Text of Section 206CCA
Insertion of 206CCA (TCS) vide Finance Act, 2021
• W.e.f. 1st July, 2021; Where tax is being collected under the provisions of Chapter XVIIB from a specified
person.
• Specified person means, a person who has not filed the returns of income for both of the two assessment years
relevant to the two previous years immediately prior to the previous year in which tax is required to be
deducted, for which the time limit of filing return of income under section 139(1) has expired; and the
aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in
each of these two previous years
Tax is to be collected at a higher of the following rates :
• at twice the rate specified in the relevant provision of the Act or
• at the rate of 5%
Exceptions to 206CCA:
• This provision does not apply in a case where such sum is being received by a non resident who does not have
a Permanent Establishment (PE) in India. PE includes a fixed place of business through which the business of
the enterprise is carried on, whether wholly or partly; or

4. Specified Person
Person
Has filed returns for any
one of the two previous
years
Not a specified person
If the aggregate TDS and
TCS does not exceed Rs.
50,000 in one of the two
preceding years
Not a specified person
Has not filed returns for
both the years
preceding and
If the aggregate TDS and
TCS does not exceed Rs.
50,000 in one of the two
preceding years
Not a specified person
If the aggregate TDS and
TCS does exceeds Rs.
50,000 in each of the
two preceding years
Specified Person

5. Previous years to be considered for payments made in FY
2021-22
Class of
persons
Individuals and other
persons who are not
subject to audit
Before
30.09.2021*
FY 2018-19 and
FY 2019-20
After
30.09.2021
FY 2019-20 and
FY 2020-21
Individuals and other
persons who are
subject to audit
Before
30.11.2021*
FY 2018-19 and
FY 2019-20
After
30.11.2021
FY 2019-20 and
FY 2020-21
Entities for which
Transfer pricing is
applicable
Before
31.12.2021*
FY 2018-19 and
FY 2019-20
After
31.12.2021
FY 2019-20 and
FY 2020-21
As per Circular 11 of 2021, it has been clarified that, the person’s name would be removed from the list of
specified persons on the due date of filing of return of income for A. Y. 2021-22 or the date of actual filing of
valid return( filed & verified) whichever is later.
*Due dates for FY 2020-21 u/s 139(1) have been extended by CBDT vide 09/2021 dated 20th May, 2021.

6. Functionality provided by Income Tax Department
To ease this compliance burden, the Central Board of Direct
Taxes is issuing a new functionality "Compliance Check for
Sections 206AB & 206CCA". This functionality is made
available through reporting portal of the Income-tax
Department : https://report.insight.gov.in .
The functionality procedure is given in subsequent slides.

7. FAQs

8. 1. What happens if the tax deductee/collectee has filed belated
returns for the relevant previous years?
A person will be treated as a "Specified person" where he has not filed the tax returns
for both the applicable PYs. As such, the section does not require that the tax
deductee/collectee should have filed the tax return within the due date mentioned in
Section 139(1), for not being treated as a "Specified person" under the Section.
Also, it has been clarified in the circular no. 11 of 2021 that, if a specified person files
return for FY 2018-19 or FY 2019-20 during FY 2021-22, his name would be removed
from the list of specified persons. Which means, if the return is filed beyond the due
date specified under 139(1) of the Act, the person is not considered as specified
person for the purpose of Section 206AB or 206CCA.

9. 2. Will the person not be treated as a specified person if return has
been filed for FY 2020-21 before the due date?
It has been specified in the circular no. 11 of 2021 that, “If any specified person files a
valid return of income (filed & verified) for assessment year 2021-22, the person’s
name would be removed from the list of specified persons. This will be done on the
due date of filing of return of income for A.Y. 2021-22 or the date of actual filing of
valid return ( filed & verified) whichever is later.”
Hence, it can be concluded that even if return has been filed for FY 2020-21 before the
due date, the person’s name would be removed only on the expiry of the due date.
It can also be concluded that if return has been filed beyond the due date, the persons
name would removed from the list of specified persons on such date on which valid
return has been filed & verified.

10. 3. What happens if the tax deductee/collectee is not liable to file the tax return
under the provisions of the Act and therefore he has not filed the returns for
applicable PYs?
It may be noted that Section 206AB does not provide an exemption in such cases as the
section only quotes that, “person who has not filed the returns of income for both of
the two assessment years” and does not refer to liability to file the returns.
However, the Tax deductors can keep in mind the threshold of Rs. 50,000 of TDS while
determining the applicability of Section 206AB in case of such deductees/collectees.

11. 4. Should the threshold of Rs. 50,000 for a deductee be considered as an
aggregate of tax deducted/collected by all the deductors/collectors or the
amount of tax deducted/collected by the deductor/collector who is making
the payment in current financial year?
A person would be considered as a specified person for the purpose of Section 206AB
or 206CCA if the aggregate of TDS and TCS in his case is Rs. 50,000 or more in each of
these two previous years.
The income tax functionality verifies the threshold limit as an aggregate of TDS and
TCS of the deductee for a previous years and not deductor/collector wise.
Hence, the threshold of Rs. 50,000 is aggregate of TDS/TCS deducted/collected by all
deductors/collectors and not on deductor/collector basis.

12. 5. Interplay of Section 206AA (Non PAN Cases) and 206AB
As per Section 206AB(2), where both the provisions of 206AA and 206AB are
applicable to a deductee, that is, the deductee has neither furnished PAN to the
deductor nor furnished his return of income for the specified periods, then the tax
shall be deducted at the rates provided in 206AA or 206AB, whichever is higher.

13. 6. Section 206CC v. Section 206CCA
Basis of
distinction
Section 206CC Section 206CCA
Applicability When collectee fails to furnish his PAN When collectee fails to furnish the return of
income for the specified period and the
aggregate amount of tax deducted or
collected during such specified period
exceeds the specified limit
Rate for
deduction
Higher of:
• Twice the rate specified in Section 206C;
• 5%.
Higher of:
• Twice the rate specified in section 206C
• 5%
Exception If the non-resident does not have a PE in
India
If the non-resident does not have a PE in
India
Special tax rates The tax shall be collected at the rate of 1% if
tax is collectable under Section 206C(1H). -

14. 7. Interplay of Section 206CC (Non PAN Cases) and 206CCA
As per Section 206CCA(2), where both the provisions of 206CC and 206CCA are
applicable to a collectee, that is, the collectee has neither furnished PAN to the
collector nor furnished his return of income for the specified periods, then the tax
shall be collected at the rates provided in 206CC or 206CCA, whichever is higher.

15. 8. Should the status of specified persons be checked on
functionality every time a payment is made?
The Income Tax Department’s functionality prepares a list of specified persons as on
the start of the financial year 2021-22, taking previous years 2018-19 and 2019-20 as
the two relevant previous years. List contains names of taxpayers who did not file
return of income for both assessment years 2019-20 and 2020-21 and have aggregate
of TDS and TCS of fifty thousand rupees or more in each of these two previous years.
During the financial year 2021-22, no new names are added In the list of specified
persons.
Hence, if a person has been shown as a non-specified person for the purpose of
Section 206AB and 206CCA, the deductor or collector can be assured that those PANs
would remain outside the list of specified persons during that financial year as no new
names would be added to the list of specified persons.

16. Compliance check for Section
206AB and 206CCA –
Registration and Search process

17. To access the “Compliance Check for Section 206AB & 206CCA” functionality, tax
deductors/collectors need to register through TAN on the Reporting Portal of Income-tax
Department. Following steps may be followed for registration of TAN on reporting portal:
• Step: 1 Go to Reporting Portal at URL https://report.insight.gov.in.
• Step: 2 On the left sidebar of the Reporting Portal homepage, click on Register button.
• Step: 3 User is redirected to the e-filing login page. Or
• Step: 4 Directly navigated to e-filing portal through http://www.incometax.gov.in/
• Step: 5 Log in to e-filing using e-filing login credential of TAN.
• Step: 6 Under “Pending Actions”, select “Reporting Portal”.
• Step: 7 After being redirected to the Reporting portal, select New Registration option and click Continue.
• Step: 8 On the next screen, select the Form type as Compliance Check (Tax Deductor & Collector). The Entity Category
will be displayed based on the category in which TAN is registered at e-filing. Click Continue to navigate to entity details
page.
• Step: 9 Enter relevant entity details on entity details page and click on “Add Principal Officer” button to add Principal
Officer.
• Step: 10 Enter Principal Officer details on the Principal Officer Details page.
• Step: 11 If more users such as Nodal Officer, Alternate Nodal Officer and other users are to be registered at this instance,
adding the details of such users can be continued, otherwise the same can be done after registration also.
• Step: 12 Click on Preview button to view the entered entity and principal officer details.
• Step: 13 Click on Submit button to submit the registration request.
• Step: 14 Acknowledgement receipt of registration request is provided through portal and the same will also be shared
through an email notification to the Principal Officer.
• Step: 15 Once the registration request is approved by Income tax Department, email notification will be shared with the
Principal Officer along with ITDREIN details and login credentials.

18. Accessing the functionality on Reporting Portal – by Principal
Officer

19. Compliance Check for Section 206AB & 206CCA
Upon clicking Compliance Check for Section 206AB & 206CCA at home page, the
compliance check functionality page appears. Through the functionality, tax deductors
or collectors can verify if any person (PAN) is a “Specified Person” as defined in Section
206AB & 206CCA.
The same can be done in two modes:
PAN Search: To verify for single PAN
Bulk Search: To verify for PANs in bulk

20. PAN Search (Single PAN Search)
Step 1: Select PAN Search tab under Compliance Check for Section 206AB & 206CCA functionality.
Step 2: Enter valid PAN & captcha code and click Search.
Following Output result will be displayed upon entering a valid PAN & captcha code. Output result will not be shown if Invalid PAN is
entered.
• Output Result-
• Financial Year: Current Financial Year
• PAN: As provided in the input.
• Name: Masked name of the Person (as per PAN).
• PAN Allotment date: Date of allotment of PAN.
• PAN-Aadhaar Link Status: Status of PAN-Aadhaar linking for individual PAN holders as on date. The response options are Linked (PAN and
Aadhaar are linked), Not Linked (PAN & Aadhaar are not linked), Exempt (PAN is exempted from PAN-Aadhaar linking requirements as per
Department of Revenue Notification No. 37/2017 dated 11th May 2017) or Not-Applicable (PAN belongs to non-individual person).
Specified Person u/s 206AB & 206CCA: The response options are Yes (PAN is a specified person as per section 206AB/206CCA as on date) or No
(PAN is not a specified person as per section 206AB/206CCA as on date).
Output will also provide the date on which the “Specified Person” status as per section 206AB and 206CCA is determined.
Step 3: Click PDF icon to download the details in PDF format.

21. Bulk Search - Procedure