{"id":5039,"date":"2021-07-27T10:13:09","date_gmt":"2021-07-27T04:43:09","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=5039"},"modified":"2022-12-22T18:08:03","modified_gmt":"2022-12-22T12:38:03","slug":"sections-206ab-and-206cca-compliance-check","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/","title":{"rendered":"Sections 206AB and 206CCA \u2013 Compliance Check Functionality"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Sections 206AB and 206CCA of Income Tax Act 1961 are introduced in Finance Bill, 2021 to ensure compliance with ITR filing. <\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">Read on to understand the applicability and scope of sections 206AB &amp; 206CCA that have come into effect from 1st July 2021.\u00a0<\/span><\/p>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_206ab_and_section_205cc&amp;utm_source=blog&amp;utm_medium=cta\">Pay TDS now<\/a><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e1af9ac187f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e1af9ac187f\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Sections-206AB-and-206CCA-%E2%80%93-Income-Tax-Act-1961\" >Sections 206AB and 206CCA &#8211; Income Tax Act 1961<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Higher-rate-of-tax-deduction-under-sections-206AB-and-206CCA\" >Higher rate of tax deduction under sections 206AB and 206CCA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Applicability-of-sections-206AB-and-206CCA\" >Applicability of sections\u00a0206AB and 206CCA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Compliance-check-for-sections-206AB-and-206CCA\" >Compliance check for sections 206AB and 206CCA\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#How-does-the-compliance-check-facility-on-the-income-tax-portal-work\" >How does the compliance check facility on the income tax portal work\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#When-is-the-list-prepared-for-Section-206AB-and-206CCA\" >When is the list prepared for Section 206AB and 206CCA\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Example-to-understand-the-applicability-of-Section-206AB-206CCA\" >Example to understand the applicability of Section 206AB &amp; 206CCA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/business-banking\/sections-206ab-and-206cca-compliance-check\/#Make-hassle-free-TDS-Payments\" >Make hassle-free TDS Payments<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Sections-206AB-and-206CCA-%E2%80%93-Income-Tax-Act-1961\"><\/span>Sections 206AB and 206CCA &#8211; Income Tax Act 1961<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Sections 206AB and 206CCA mandate tax deduction or collection at a higher rate if a \u2018specified person\u2019 has failed to file income tax returns for the previous two financial years. While Section 206AB deals with <a href=\"https:\/\/razorpay.com\/x\/tds-online-payment\/\">TDS (tax deducted at source)<\/a>, 206CCA is applicable for TCS (tax collected at source) at a higher rate.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In both the sections, if a person satisfies the following two conditions, then he\/ she is regarded as a \u2018specified person\u2019 &#8211;\u00a0<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">He\/She has not filed the income tax returns for the previous two financial years preceding the year in which TDS or TCS is required to be deducted or collected. <\/span><span style=\"font-weight: 400;\">For example, previous years for the financial year 2021-22 would be 2018-19 and 2019-20.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The total <\/span><span style=\"font-weight: 400;\">TDS<\/span><span style=\"font-weight: 400;\"> or TCS is more than Rs. 50,000 in each of the previous two financial years<\/span><\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Higher-rate-of-tax-deduction-under-sections-206AB-and-206CCA\"><\/span><b>Higher rate of tax deduction under sections 206AB and 206CCA<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If sections 206AB and 206CCA are applicable to a tax-payer, <\/span><span style=\"font-weight: 400;\">the rate of TDS or TCS will be twice the original rate or 5%, whichever is higher. Also, if the \u2018specified person\u2019 fails to furnish PAN, then TDS will be deducted at the rate of 20%.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Applicability-of-sections-206AB-and-206CCA\"><\/span><b>Applicability of sections<\/b><b>\u00a0206AB and 206CCA<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Sections 206AB and 206CCA are applicable on all nature of payments except &#8211;\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS on lottery payments (194B)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS on provident fund withdrawals (192A)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS on salary payments(192)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS Income of investment securitization (194LBC)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS on horse races winnings (194BB)\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS on cash withdrawal (194N)<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/?r=blog_cta_business_banking_section_206ab_and_section_205cc&amp;utm_source=blog&amp;utm_medium=cta\" data-schema-attribute=\"\">Explore RazorpayX!<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Compliance-check-for-sections-206AB-and-206CCA\"><\/span><b>Compliance check for sections 206AB and 206CCA\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">On average, businesses have to make hundreds of TDS payments. And, it\u2019s practically impossible to manually check if the deductee or collectee is a defaulter of Section 206AB &amp; 206CCA for every TDS\/TCS payment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To solve this challenge, an online \u2018compliance check functionality\u2019 for sections 206AB and 206CCA has been launched on the <\/span><a href=\"https:\/\/report.insight.gov.in\/reporting-webapp\/portal\/homePage\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Income Tax Portal<\/span><\/a><span style=\"font-weight: 400;\"> to help deductors or collectors identify the \u2018specified person.\u2019\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How-does-the-compliance-check-facility-on-the-income-tax-portal-work\"><\/span><b>How does the compliance check facility on the income tax portal work\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As businesses &amp; individuals, you can type in the PAN of the deductees\/collectees on the portal, and a response sheet is generated that shows whether the deductee\/collectee is a\u00a0 \u2018specified person\u2019 or not.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are two types of search options available on the portal &#8211;<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">1. <\/span><b>Single PAN Search<\/b><span style=\"font-weight: 400;\">, where you can check and verify only a single PAN, and\u00a0<\/span><\/p>\n<p>2. <b>Bulk Search<\/b><span style=\"font-weight: 400;\">, where you can search Multiple PANs in one go. All you need to do is upload all the PAN numbers in a CSV file. After this, an output CSV file will be generated containing the list of all the &#8216;specified persons&#8217;.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"When-is-the-list-prepared-for-Section-206AB-and-206CCA\"><\/span><b>When is the list prepared for Section 206AB and 206CCA\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The income tax authorities prepare a comprehensive list of specified persons at the start of the financial year. The list contains details of &#8216;specified persons&#8217; who have not filed their income tax returns for the previous two financial years and have a total TDS &amp; TCS of Rs 50,000 or more in each of these two financial years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Note:<\/strong> New entries of &#8216;specified persons&#8217; are not added during the financial year. However, a \u2018specified person\u2019 can be removed from the list in any one of the following cases:<\/span><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\"> If \u2018specified person\u2019 files a valid return of income (filed &amp; verified) for any of the previous two financial years<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> If the total TDS and TCS deducted and collected from a \u2018specified person\u2019 in any previous two years is less than Rs. 50,000<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> If revised TCS\/ TDS returns pertaining to the two previous financial years are filed during the current financial year<\/span><\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Example-to-understand-the-applicability-of-Section-206AB-206CCA\"><\/span><b>Example to understand the applicability of Section 206AB &amp; 206CCA<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Let\u2019s say a company, Sapna Pvt. Ltd. (deductor) pays shop rent of Rs 50 lakh per month to Mr Arun (deductee). And, Mr Arun (deductee) has not filed income tax returns for the last two financial years &#8211;\u00a0 2018-19 &amp; 2019-20.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this case, Mr Arun is a \u2018specified person\u2019 and the TDS rate will be:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">(a) Twice the original rate: 2 X 10% (TDS for rent payments is deductible at 10%) = <strong>20%, <\/strong>or<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\"><br \/>\n(b)<strong> 5%<\/strong><\/span><\/p>\n<p><span style=\"font-weight: 400;\">whichever is higher.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence, Sapna Pvt. Ltd. is liable to deduct TDS @ 20%.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Make-hassle-free-TDS-Payments\"><\/span><b>Make hassle-free TDS Payments<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Make your monthly TDS payments in 30 seconds and in under 3 steps, completely FREE on our new TDS Payment tool.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2013 No sign-up required<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2013 Completely free<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2013 Trusted by top Indian CAs<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2013 100% secure payments<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/tax-payments\/?r=blog_cta_business_banking_section_206ab_and_section_205cc&amp;utm_source=blog&amp;utm_medium=cta\">Pay TDS now<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Read on to understand the applicability and scope of sections 206AB and 206CCA that have come into effect from 1st July 2021.\u00a0<\/p>\n","protected":false},"author":151156479,"featured_media":5042,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3437],"tags":[],"class_list":{"0":"post-5039","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5039","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156479"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=5039"}],"version-history":[{"count":6,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5039\/revisions"}],"predecessor-version":[{"id":7276,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/5039\/revisions\/7276"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/5042"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=5039"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=5039"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=5039"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}