Analysis of Section 206AB and Section 206CCA

Section 206AB and 206CCA were introduced in the Finance Bill 2021. They provide for a higher deduction of TDS and TCS respectively, if certain conditions are met. Let us now analyze in detail about Section 206AB and 206CCA.

Section 206AB 

As per Section 206AB, tax shall be deducted on any sum or income or amount paid or payable or credited by a person to a specified person, at the rate which is higher of the following-

1. At twice the rate specified in relevant provisions of the Act.
2. At twice the rate or rates in force.
3. At the rate of five percent.

However, this section shall not apply if Tax is required to be deducted under the following sections-

1. Section 192- TDS on Salary
2. Section 192A- TDS on premature withdrawal of EPF
3. Section 194B- TDS on winnings of lotteries
4. Section 194BB- TDS on winnings of horse races
5. Section 194LBC- TDS by securitization trust
6. Section 194N- TDS on Cash Withdrawal

If the provisions of Section 206AA are applicable to a specified person, then in addition to the provisions of this section, tax shall be deducted at a higher of the rates provided in this section and in Section 206AB.

Section 206CCA 

As per Section 206CCA, tax is required to be collected at source on any sum or amount received by a person from a specified person, at the rate which is higher of the following-

1. At twice the rate specified in relevant provisions of the Act.
2. At the rate of five percent.

If the provisions of section 206CC is applicable to a specified person, in addition to the provisions of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC.

Meaning of Specified Person 

Specified person means a person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing return of income under sub-section (1) of section 139 has expired and the aggregate of tax deducted at source and tax collected at source in his case is rupees fifty thousand or more in each of these two previous years.

However, the specified person shall not include a non-resident who does not have a permanent establishment in India. The expression "permanent establishment" includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.