TDS Rates applicable in case of non-liking of Aadhaar or non-compliance due to non-filing of ITR
Section 206AB will be notified with effect from 1st July 2021. This Section was introduced by Finance Act 2021. As per this Section, the TDS Rate of
- twice the rate specified in the relevant provision of the Act; or
- twice the rate or rates in force; or
- the rate of five percent
Whichever is higher will be applicable in the case of the Specified non-filers of income tax return [ITR].
Who is Specified Non-Filler?
The specified person is a person:
- who has not filed the returns of income for both of the two assessment years relevant to the two previous years which are immediately before the previous year in which tax is required to be deducted or collected, as the case may be.
- Further the time limit for filing income tax return [ITR] under sub-section (1) of section 139 of the Act has expired for both these assessment years.
- The aggregate of tax deducted at source [TDS] and tax collected at source [TCS] in his case is Rs 50,000 or more in each of these two previous years.
- A specified person shall not include a non-resident who does not have a permanent establishment in India
|Section||Current Rate||TDS Rate in case of Non-Compliance|
|Section 194A : Income by way of interest other than “Interest on securities”||10||20|
|Section 194C : Payment to contractor/sub-contractor|
|Section 194J : Fees for professional or technical services:|
|iv) sum paid or payable towards fees for technical services||2||5|
|v) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films;||2||5|
|vi) Any other sum||10||20|
|Section 194-I : Rent|
|a) Plant & Machinery||2||5|
|b) Land or building or furniture or fitting||10||20|
|Section 194H : Commission or brokerage||5||10|
|Section 193 : Interest on securities||10||20|
|Section 194 : Dividend||10||20|
|Section 194D : Insurance commission||10||20|
|Section 194DA : Payment in respect of life insurance policy
w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised insurance pay-out
|Section 194EE : Payment in respect of deposits under National Savings Scheme||10||20|
|Section 194F : Payment on account of repurchase of unit by Mutual Fund or UnitTrust of India||20||40|
|Section 194G : Commission, etc., on sale of lottery tickets||5||10|
|Section 194-IA : Payment on transfer of certain immovable property other than agricultural land||1||5|
|Section 194-IB: Payment of rent by certain individuals or Hindu undivided family||5||10|
|Section 194-IC : Payment of monetary consideration under Joint DevelopmentAgreements||10||20|
|Section 194K : Income in respect of units payable to resident person||10||20|
|Section 194LA : Payment of compensation on acquisition of certain immovable property||10||20|
|Section 194M : Payment of commission (not being insurance commission),brokerage, contractual fee, professional fee to a resident person by an Individual ora HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.
Tax shall be deducted under Section 194M with effect from 1/09/2019 whenaggregate of sum credited or paid during a financial year exceeds Rs. 50 lakh.
|Section 194-O : Payment or credit of amount by the e-commerce operator to e-commerce participant||1||5|
|Section 194Q : Payment to resident for purchase of goods of the aggregate value exceeding Rs. 50 lakhs
Note: TDS is deductible on sum exceeding Rs. 50 lakhs
- Simply understanding, for Non-Filler TDS Rate, is twice the rate given in section or 5% whichever is higher.
- This section shall not apply where the tax is required to be deducted under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act.
Non-Linking of Aadhar & PAN
As per Section 139AA, in case of Non-linking of Aadhar & PAN, The PAN will be Inoperative. Inoperative PAN will be as good as no PAN. [Sec 206AA] In case of No PAN, TDS shall be deducted at the higher of the following rates, namely:—
- at the rate specified in the relevant provision of this Act; or
- at the rate or rates in force; or
- at the rate of 20%:
What if both Section 206AA & 206AB are applicable on A Taxpayer?
If the provisions of section 206AA & section 206AB are applicable on a taxpayer, the tax shall be deducted at higher of the two rates provided in section 206AA & section 206AB.
How Can I recognize that the vendor to whom payment has to be made has filed his return?
There is no mechanism for recognizing the vendor who has not filed his ITR [Income Tax Return]. But we can follow be mentioned procedure in your own safety.
- Always take a copy of PAN from the Vendor
- In case the Vendor is not required to File the ITR, always take declaration for the same.
- If the vendor is required to file ITR, one can ask for the screenshot of his E-Filing DashBoard.