Central Board of Direct Taxes (CBDT) has amended applicability of Section 206AB and Section 206CCA of Income Tax Act, 1961 vide Notification No. 45/2024/F. No 370142/8/2024-TPL and Notification No. 46/2024 F. No 370142/8/2024-TPL dated May 27, 2024.
By this notification, CBDT excluded Reserve Bank of India (RBI) from the definition of specified person for the purposes of Section 206AB and Section 206CCA.
What is Section 206AB and Section 206CCA?
Section 206AB/206CCA: Rate of TDS/TCS on payments made to specified persons
| Section 206AB | Section 206CCA |
| (i) At twice the rates specified in the relevant provisions of the act | (i) At twice the rates specified in the relevant provisions of the act |
| (ii) At twice the rate or rates in force | (ii) At the rate of 5% |
| (iii) At the rate of 5% | |
| Whichever is Higher | Whichever is Higher |
Who are Specified Persons for these Sections?
1. Person, who has not filed return of income for two previous years immediately preceding the previous year in which tax is required to be deducted/collected;
2. Time limit for filing such return of income u/s 139(1) has expired; and
3. Aggregate of Tax deducted/collected at source in each of these two financial years is INR 50,000/- or more.
Who are not considered as Specified Persons for these Sections?
1. Non-resident person, who does not have a permanent establishment in India;
2. A person who is not required to file return of income for the assessment year relevant to the said previous year and is notified by the Central Government in the Official Gazette in this behalf.
In conclusion, the exclusion of the RBI from the definition of specified persons under Sections 206AB and 206CCA marks a significant amendment by the CBDT. This change aims to streamline tax compliance and ease the operational burden on the RBI. Taxpayers and entities should stay informed about these updates to ensure compliance and avoid any potential issues related to TDS and TCS rates.
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