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Section 206CCA TCS for non-filers of Income Tax Return


In Budget 2021, the finance minister has introduced a new section, which shall be applicable from 1st July 2021. The main objective to introduce Section 206CCA is to ensure that taxpayers from whom tax is collected has file their income tax return.


This provision would apply, notwithstanding anything contained in any other provisions of this Act, where tax is required to be collected under Chapter XVII-BB and the person from whom it is collected had not filed his return of income.

Section 206CCA provides to deduct TCS at higher rates as specified in the act, on amount paid/payable to the specified persons, who are not filing their income tax return.

‘Specified Person’ includes the person who satisfies all the following criteria-
  • The person to whom the tax is required to be collected but who has not filed income tax return of two previous years immediately before the previous year in which tax is required to be deducted;
  • The time limit for filing of an income tax return under section 139(1) has expired;
  • The aggregate amount of tax collected at source is Rs. 50,000 or more in each of the two previous years.

The term ‘specified person’ doesn’t include a non-resident not having 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.’

See the other post: Difference between TDS and TCS

TCS Rate under section 206CCA-

The rate of tax collected at source shall be higher of the following rates-

(a)  Twice the rate specified in the relevant provision of the Act; or

 (b)  Twice the rate or rates in force; or

 (c)  The rate of 5%

In case of PAN not furnished by the such specified person

The TCS will be deducted at higher of-

Rates according to this section or;

Rates according to Section 206CC of the Income Tax Act 1961.


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