TDS on Specified Persons under section 206AB of Income Tax Act, 1961
Section 206AB of the Income Tax Act is recently introduced vide the Finance Act, 2021. Section 206AB mandates the person to deduct TDS on ‘Specified person’. And it’s applicable from 01.07.2021.
Provision of Section 206AB of the Income Tax Act–
- The person paying any sum to the specified person is liable to deduct TDS.
- On any amount/ sum/ income paid or payable or credited to the specified person.
‘Specified Person’
All three points need to be satisfied.
1. The person has not filed income tax return of two previous years immediately before the previous year in which TDS is required to be deducted; and
2. The due date of time limit of filing of an income tax return as per section 139(1) is expired; and
3. The total TDS and TCS is INR 50,000 or more in each of the two previous years.
TDS at higher rates
1. Twice the rate as specified under the relevant provision of the Income Tax Act; or
2. Twice the rate/ rates in force; or
3. At the rate of 5%.
Exemption under section 206AB
| 1 | Section 192 | Salary |
| 2 | Section 192A | Premature withdrawal from the accumulated balance of PF. |
| 3 | Section 194B | Winning from lottery, puzzle or games. |
| 4 | Section 194BB | Winning from horse race. |
| 5 | Section 194LBC | Income against investment in the securitization trust. |
| 6 | Section 194N | Payments of certain amount of withdraw in cash. |
Section 206AA vs 206AB–
Gist of Section 206AA mandates the person to deduct TDS at higher rates in case of non-availability of PAN.
Higher of the two rates prescribed under section 206AA and section 206 AB applies/prevails.
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Disclaimer: The above article is totally based on self-interpretation of the author on particular section; reader or viewer are requested to do refer the act or other supplementary books. It’s totally a draft gist of the section and it cannot be challenged anymore.
Author Bio
I have received rent payment and deducting TDS 10% in the individual name. Last month onwards
Pan higher Specified Person TDS Sec. 206AB of Income Tax act to duducting 40% TDS in Rent . Kindly suggest me Mobile No. 9940138664