Requirement to furnish Permanent Account Number and IT filing details
First posted on 17-June-2021
Last Updated on 22-June-2021
Sec 206AA Requirement to furnish Permanent Account Number by deductee.
The deductee shall furnish his Permanent Account Number to the deductor and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.
If PAN is not furnished TDS shall higher of
- at the rate specified in the relevant provision of this Act; or
- at the rate or rates in force; or
- at the rate of twenty per cent [5% in case of 194Q]
Sec 206AB TDS if deductee has not filed income tax returns
TDS shall be higher of
- at twice the rate specified in the relevant provision of the Act; or
- at twice the rate or rates in force; or
- at the rate of five per cent.
Conditions
- If deductee has not filed income tax return for both of the two previous financials years
- Time limit for filing return u/s 139(1) has expired
- Aggregate TDS and TCS of the deductee is Rs.50,000 or more in each of those financial years (based on interpretation of the Act read with explanatory Circular no. 11 of 2021 dated 21st June 2021)
- Applicable from 01-07-2021
Note:
Example: Till Mar 2022, the two previous financial years are FY 2018-19 & FY 2019-20.
ITR V copy to be obtained (Declaration that IT return has been filed is not sufficient]
Not applicable
- Non-resident deductee having no permanent establishment in India
- Not applicable to Sec 192 (salary) and Sec 194N (cash withdrawals) among others
In case of non furnishing of PAN, Sec 206AA shall also be applicable. Hence, TDS shall be higher of
- at twice the rate specified in the relevant provision of the Act; or
- at twice the rate or rates in force; or
- at the rate of twenty per cent (5% in case of 194Q)
Sec 206CC Requirement to furnish Permanent Account Number by collectee.
The collectee shall furnish his Permanent Account Number to the collector and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.
If PAN is not furnished TCS shall higher of
- at twice the rate specified in the relevant provision of this Act; or
- at the rate of five per cent. [1% in case of 206C (1H)]
Sec 206CCA TCS if collectee has not filed income tax returns
TCS shall be higher of
- at twice the rate specified in the relevant provision of the Act; or
- at the rate of five per cent.
Conditions
- If collectee has not filed income tax return for both of the two previous financials years
- Time limit for filing return u/s 139(1) has expired
- Aggregate TDS and TCS of the collectee is Rs.50,000 or more in each of those financial years (based on interpretation of the Act read with explanatory Circular no. 11 of 2021 dated 21st June 2021)
- Applicable from 01-07-2021
Not applicable
- Non-resident collectee having no permanent establishment in India
In case of non furnishing of PAN, Sec 206CC shall also be applicable. Hence, TDS shall be higher of
- at twice the rate specified in the relevant provision of the Act; or
- at the rate of five per cent.
How to check compliance with Sec 206AB/CCA: The Income Tax Department has introduced new functionality to check compliance for Section 206AB & 206CCA. Once a year, before TDS/TCS deduction, the PAN number can be checked on the Income Tax site by the person deducting TDS or collecting TCS. Higher rate can be applied only if it is reported in the Compliance Check.
Due to this circular, no declaration needs to be asked or given regarding filing of IT returns for the last 2 years.
Further reading
1. Studycafe.in article – TDS /TCS changes w.e.f. 1st July 2021
2. Circular regarding compliance check for 206AB & 206CCA
Extracts of Income Tax provisions for reference:
Requirement to furnish Permanent Account Number.
206AA. (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:—
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent:
54[Provided that where the tax is required to be deducted under section 194-O, the provisions of clause (iii) shall apply as if for the words “twenty per cent”, the words “five per cent” had been substituted:]
55[Provided further that where the tax is required to be deducted under section 194Q, the provisions of clause (iii) shall apply as if for the words “twenty per cent”, the words “five per cent” had been substituted.]
(2) No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A shall be valid unless the person furnishes his Permanent Account Number in such declaration.
(3) In case any declaration becomes invalid under sub-section (2), the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1).
(4) No certificate under section 197 shall be granted unless the application made under that section contains the Permanent Account Number of the applicant.
(5) The deductee shall furnish his Permanent Account Number to the deductor and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.
(6) Where the Permanent Account Number provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section (1) shall apply accordingly.
(7) The provisions of this section shall not apply to a non-resident, not being a company, or to a foreign company, in respect of—
(i) payment of interest on long-term bonds as referred to in section 194LC; and
(ii) any other payment subject to such conditions as may be prescribed.
1 Special provision for deduction of tax at source for non-filers of income-tax return.
206AB. (1) Notwithstanding anything contained in any other provisions of this Act, where tax is required to be deducted at source under the provisions of Chapter XVIIB, other than section 192, 192A, 194B, 194BB, 194LBC or 194N on any sum or income or amount paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted at the higher of the following rates, namely:—
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at twice the rate or rates in force; or
(iii) at the rate of five per cent.
(2) If the provisions of section 206AA is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA.
(3) For the purposes of this section “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 deducted, 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:
Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.
Explanation.—For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.
1 Ins. by the Act No. 13 of 2021, w.e.f. 1-7-2021.
Requirement to furnish Permanent Account number by collectee.
206CC. (1) Notwithstanding anything contained in any other provisions of this Act, any person paying any sum or amount, on which tax is collectible at source under Chapter XVII-BB (herein referred to as collectee) shall furnish his Permanent Account Number to the person responsible for collecting such tax (herein referred to as collector), failing which tax shall be collected at the higher of the following rates, namely:—
(i) at twice the rate specified in the relevant provision of this Act; or
(ii) at the rate of five per cent.
(2) No declaration under sub-section (1A) of section 206C shall be valid unless the person furnishes his Permanent Account Number in such declaration.
(3) In case any declaration becomes invalid under sub-section (2), the collector shall collect the tax at source in accordance with the provisions of sub-section (1).
(4) No certificate under sub-section (9) of section 206C shall be granted unless the application made under that section contains the Permanent Account Number of the applicant.
(5) The collectee shall furnish his Permanent Account Number to the collector and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.
(6) Where the Permanent Account Number provided to the collector is invalid or does not belong to the collectee, it shall be deemed that the collectee has not furnished his Permanent Account Number to the collector and the provisions of sub-section (1) shall apply accordingly.
(7) The provisions of this section shall not apply to a non-resident who does not have permanent establishment in India.
Explanation.—For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.
2 Special provision for collection of tax at source for non-filers of income-tax return.
206CCA. (1) Notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected at source under the provisions of Chapter XVII-BB, on any sum or amount received by a person (hereafter referred to as collectee) from a specified person, the tax shall be collected at the higher of the following two rates, namely:—
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at the rate of five per cent.
(2) 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.
(3) For the purposes of this section “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:
Provided that the specified person shall not include a non-resident who does not have a permanent establishment in India.
Explanation.—For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.
2 Ins. by the Act No. 13 of 2021, w.e.f. 1-7-2021.
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