Income Tax : Know when higher TDS applies under Sections 206AA and 206AB for non-furnishing of PAN or non-filing of returns, and related exempt...
Income Tax : Section 194-IA mandates 1% TDS on immovable property purchases from resident sellers if consideration or stamp duty value is ₹50...
Income Tax : Learn about Tax Deducted at Source (TDS), its purpose, scope, and the applicable deduction rates for FY 2025-26 under various sect...
Income Tax : Sections 206AA and 206AB mandate higher TDS rates for recipients who fail to furnish PAN (up to 20%) or do not file an Income Tax ...
Income Tax : Know the key provisions of Sections 194Q and 206C(1H) on TDS and TCS for sale or purchase of goods, including thresholds, rates, e...
Income Tax : Introduction: The Government of India, through the Ministry of Finance’s Department of Revenue, has provided essential updat...
Income Tax : Under the current provisions of Section 206AA, tax is required to be deducted by the deductor at a higher rate as prescribed under...
Income Tax : Rationalisation of With-Holding Tax (WHT) to Encourage Greater Subscription in Indian Debt Securities by Foreign Investors, Encour...
Income Tax : The Finance (No.2) Act of 2009 introduced section 206AA under the Income Tax Act, 1961 (the ITA) to provide that any person who is...
Income Tax : The Finance Act, 2009 introduced new provisions (section 206AA) in the Income-tax Act, 1961 (the Act). As per these provisions any...
Income Tax : The Tribunal held that no TDS demand can survive where tax was duly deposited and PAN became operative within the CBDT-prescribed ...
Income Tax : The Tribunal examined whether tax was short-deducted on remittances to non-resident shareholders. It held that TDS at 11.54%, deri...
Corporate Law : The Court clarified that rental payments for aircraft engines fall under equipment per the India-Netherlands DTAA, and beneficial ...
Income Tax : The Delhi High Court held that TDS for non-residents without PAN should follow DTAA rates, not the 20% rate under Section 206AA. T...
Income Tax : Supreme Court dismissed SLPs, confirming that DTAA rates override Section 206AA for non-residents without PAN. The case follows th...
Income Tax : DGIT(S)/ADG(S)-2/Compliance Check/432/2021-22 Government of India Ministry of Finance Central Board of Direct Taxes Directorate of...
Income Tax : 37BC. Relaxation from deduction of tax at higher rate under section 206AA.– (1) In the case of a non-resident, not being a compa...
A literal reading of sec. 195A implies that the income should be increased at the rates in force for the financial years and not the rates at which the tax is to be withheld by the assessee. The Hon’ble Apex Court in the case of GE India Technology (cited Supra) has held that the meaning and effect has to be given to the expression used in the section and while interpreting a section, one has to give weightage to every word used in that section.
Section 206AA of the Income Tax Act, which provides for furnishing a permanent account number, is contrary to Section 139A and discriminatory and therefore, read down from the statute for those persons, whose income is less than the taxable limit [A. Kowsalya & Others v. Union of India & Others (W.P 12780-12782/2010)]
In a writ petition filed by small investors, Karnataka High Court Held that provisions of Section 206AA of the Income Tax Act are contrary to provisions of Section 139A of the Act. Accordingly, provision of Section 206AA were made inapplicable to persons and was read down from the Act only for those persons whose income was less than the taxable limits. However, the High Court made it very clear that the provisions of the Section 206AA are applicable to the persons whose income is more than the taxable limits.
A new section 206AA was inserted in the Act, vide the Finance (No.2) Act, 2009. As per section 206AA, any person whose receipts are subject to deduction of tax at source (TDS), i.e. the tax-deductee shall mandatorily furnish his Permanent Account Number (PAN) to the tax-deductor, failing which the deductor shall deduct tax at source at higher of the following rates.
(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—
The Finance (No.2) Act of 2009 introduced section 206AA under the Income Tax Act, 1961 (the ITA) to provide that any person who is entitled to receive any sum or income or amount, on which tax is to be withheld under the ITA shall furnish PAN to the person responsible for withholding of tax. In case PAN is not furnished, minimum withholding tax rate of 20% will have to be applied. This provision is now effective from1 April 2010.
The Finance (No.2) Bill, 2009 had introduced a new section 206AA in the Income-tax Act, 1961 (ITA), which provides that every recipient of income is required to furnish its Permanent Account Number (PAN) i.e. tax registration number to the payer. From the new financial year, Assessees will have to pay a higher income tax at source if they do not have a Permanent Account Number (PAN). Tax at higher of the prescribed rate or 20 percent will be deducted on all transactions liable to tax deduction at source (TDS), if the person liable to the tax does not possess a PAN.
Currently, tax department is issuing more than 7.5 million permanent account numbers (PANs) in a year through NSDL and, nowadays, PAN is being allotted in less than a week time. With increased modernisation of the Tax Department and electronic processing of tax returns non- quoting of PANs by deductees is creating serious problems in processing of tax returns and in granting credit for tax deducted at source.
Section 206AA starts with the words “Notwithstanding anything contained in any other provisions of this Act”. This is a non-obstante clause which means that the provisions of section 206AA shall override other provisions of the Act. If we go through Section 90(2), it provides that ‘Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) of section 90, for granting relief of tax,
As per the aforesaid section 206AA, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII, shall furnish his PAN to the person responsible for deducting such tax at source. It is further provided therein that if the tax-deductee fails to furnish his PAN to the tax-deductor then the tax will be deductible at source at the higher of the following rates :-
