pri Format of Declaration under section 206AB of Income Tax Act Format of Declaration under section 206AB of Income Tax Act

With season of rains, it seems there is season of new amendments! To capture those into tax net, who has taxable income, but for some or other reason, do not file ITR, Govt is introducing new provision u/s 206AB to deduct TDS at higher rates.

Applicability:

  • This provision is applicable to each and every deductor who is required to deduct TDS under this Act from “Specified Person” .
  • Here, “Specified Person” means who has not filed his IT Returns in two years immediately preceding the previous year for which Tax is required to be deducted and total of TDS and TCS in his case is Rs.50,000/- or more in each of the year and due date of filing of ITR has expired for such years.For. Eg. If Tax is required to be deducted for July 2021, (F.Y,2021-22), relevant immediately  2 preceding previous  years for which ITR filing required to be checked are 2018-19 and 2019-20 (A.Y.2019-20 and AY 2020-21 respectively )as the time limit for filing ITR of Previous Year 2020-21 is not expired.

Rate of Deduction:

Higher of following:

  • At Twice the rate specified in the relevant provision of the Act
  • At twice the rate or rates in force
  • At the rate of 5%.
  • At the rate 20% (in case of non-furnishing of PAN)

Mechanism to Verify ITR data of Deductee:

  • In case of TDS provisions, primary onus is on deductor/ payer to deduct TDS provisions at applicable rates. Otherwise he is considered as “assessee in default”.

In absence of such mechanism  of verify ITR filing data, it is suggested to obtain declaration from the Deductee.

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Format of Self Declaration u/s 206AB of The Income Tax Act, 1961 regarding deduction of TDS

To,

Name and Address of the Deductor (Payer)

Dear Sir,

Subject : Self Declaration u/s 206AB of The Income Tax Act, 1961 regarding deduction of TDS

With reference to the above subject matter, we (Name of Supplier/Deductee/ Payee) here by confirm that; we have filed Income Tax Returns for below mentioned immediately preceding Financial Years relevant to the year of declaration.

F.Y. Whether amount of TDS is more than 50,000 Due Date

of Filing of ITR

Actual Date of Filing of ITR ITR –V Ack No.
2019-20 Yes / No
2018-19 Yes / No

We have read and understood the provisions of Section 206AB of the Act and related applicable rules , notifications , circulars . Further, above mentioned PAN and IT returns details are correct.

We authorize (Name of Deductor) to recover the differential tax at higher rates along with applicable interest and penalties in case above mentioned information is proved to be incorrect.

With submitting this declaration, it is kindly requested to consider us to be compliant with the requirements of the Sec.206AB of the Act.

Yours Truly,

Name of Supplier/ Vendor

Date:

Place:

It is anticipated that; CBDT will shortly make available facility to verify  ITR filing status of the deductee in order to make this smoothly workable.  Presently, such facility is available to banks/ post offices to comply with Provision of Sec.194N.

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6 Comments

  1. AMIT SHARMA says:

    Please Confirm, whether it is mandatory for the Filing of returns of two preceding years on the due date? if any person filing a return after the due date for both the two 2 preceding years or one year, this section is applicable or not?

  2. amar says:

    if person has filed returns for 2 preceding years and his deduction is more than 50000 in one year only shall we liable to deduct tds at higher rate?

    similiarly if person has not filed returns for 2 preceding years and his deduction is less than 50000 in one year only shall we liable to deduct tds at higher rate?

    1. vaasi malai kannan says:

      only if both the conditions satisfied, higher TDS will be deducted. please concentrate on the word “AND” between two condition.
      thank you

  3. GANDHI MOHAN BHARATI says:

    Kindly confirm that this section is applicable ONLY when both the following conditions are fulfilled –
    1. NOT filed ITR for 2 Years
    &
    2. TDS/TCS is more than 50,000/- ineach of thew two years.

    Your reply to my email gmbharathi@hotmail.com will be highly appreciated.

    I am in a village and many villagers who have Deposit in the Bank and not liable even for TDS are being asked by the Bank to submit ITR copies for 2 Years

    1. CA Madhvi Desai says:

      Hi,
      Yes .. You are right! Both conditions are mutually inclusive hence both must be fulfilled in order to attract this provision. Hope this would help.

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