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Now there will be a special provision for deduction of tax at source for non-filers of Income-tax returns. You must be thinking about how all this will work and how can we identify who is the specified person on whom higher tax will be levied. We will learn about certain sections related to the deduction of TDS and TCS. The provision will commence from 1st July 2021.

What are sections 206AB and 206CCA?

206AB– This section implies TDS( Tax deduction at source ) on the payable amount. It is for the specified persons who are not filing their income tax returns. The tax rate will be higher than specified in the act.

206CCA- Also, if according to section 206CCA, it allows Tax collection at source (TCS) on amounts received by the specified person. It will also be for the people who are not filing income tax returns and even don’t furnish their pan card.

Section 206AB will be applicable along with 206AA.

Income tax return

Where it is applicable and where not?

Exemptions – It isn’t applicable on certain conditions.

  • In case of premature withdrawal of EPF (under section 192A)
  • Income earned through any lottery (under section 194B)
  • Investment income from securitization trust (under section 194LBC)
  • TDS on cash withdrawals
  • Salary (under section 192)
  • Earning from horse races

Applicable on- It applies to the specified persons who satisfy all three conditions given below.

  • Persons who have not to file income tax returns for two consecutive years
  • A person who has crossed the time limit of filing returns under section 139(1).
  • TDS +TCS deducted is greater and equal to 50,000 in each of 2 years
  • It will be deducted on TDS or TCS whichever rate is higher.
TDS and TCS differences

Who are not eligible as a 'specified person'?

  • All those who file their income tax return from time to time.
  • A person is not a specified person if He/She is a non-resident in India. Also, the people who do not have a permanent establishment in India.

At what Rate?

If the person is specified and has to pay TDS on higher rates, the rates will be higher of

  • Twice the rate specified in the relevant provision


  • At the rate of 5%

Above two whichever will calculate the higher amount, shall be paid.

For more such updates, keep watching this space!

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