Applicability of Section 206AA and 206CCA

 

Date of Applicability-

This provision will be applicable with effect from 1st July 2021.

 

The new 206AB and Section 206CCA has been inserted after Section 206AA and Section 206CC respectively of the Act which provides for the higher rate of TDS/TCS for non-furnishing of PAN (Permanent Account Number)

·        Section 206AA: This section is applicable in the case where the person fails to furnish the PAN,

·        Section 206AB: This section is applicable in the case where the person fails to file two years return.

 

Under the respective section the person who is responsible for deducting/collecting the tax, as the case may be, is required to apply the tax rate at the higher of the following:

Tax is required to be deducted - 206AA- Fail to submit PAN	Tax is required to be Deducted-206AB- Fail to file two years return
·      at the rate specified in the relevant provision of this Act. ·      at the rate or rates in force; or ·      at the rate of 20%.	·      at twice the rate specified in the relevant provision of the Act; or ·      at twice the rate or rates in force; or ·      at the rate of 5%.

 

 

·        Section 206CC: This section is applicable in the case where the person fails to furnish the PAN.

·        Section 206 CCA: This section is applicable in a case where the person fails to file two years return.

 

Under the respective section the person who is responsible for collecting the tax, as the case may be, is required to apply the tax rate at the higher of the following:

 

Tax is required to be collected - 206CC –Fail to submit PAN	Tax is required to be collected-206CCA – Fail to file two years return.
·        at twice the rate specified in the relevant provision of the Act; or ·        at the rate of 5%.	·      at twice the rate specified in the relevant provision of the Act; or ·      at the rate of 5%.

 

Further, sub-section (2) of section 206AB provides that where both the section 206AA and 206AB are applicable i.e. the specified person has not submitted the PAN as well as not filed the return; the tax shall be deducted at the higher rate amongst both the sections i.e. TDS is required to be deducted at the higher rates amongst section 206AA and 206AB.