The Directorate of Income Tax (Systems) has issued a Notification No. 01/2022 dated 9th June, 2022 and notifies modification to the earlier Notification No. 1/2021 dated 22.06.2021 on the ‘Compliance Check Functionality for Section 206AB and Section 206CCA’ of the Income-tax Act, 1961 (‘Act’) subsequent to amendments made in the provision of section 206AB and section 206CCA by the Finance Act, 2022.
Section 206AB and section 206CCA were inserted in the Act by the Finance Act, 2021 to provide for a higher rate of deduction or collection of tax on the ‘Specified Persons’. These provisions came into effect on 1st July 2021.
Subsequent to the introduction of these provisions, the income-tax department has released an online utility for ‘Compliance Check Functionality for Section 206AB and Section 206CCA’ in order to ease the burden of the tax deductors or collectors from applying the provisions of section 206AB and section 206CCA. The utility will inform the deductor whether a particular PAN of the deductee or collectee is a filer or non-filer of return of income. In case the PAN is a non-filer, a higher rate of TDS/TCS will apply.
CBDT also issued a Circular No. 11/2021 on 21.06.2021 and Circular No. 10/2022 dated 17.05.2022 regarding the use of functionality under section 206AB and 206CCA and prescribed the guidelines for implementation of Compliance Check facilitates for the tax deductors/collectors to verify if a person is a “Specified Person” for the purpose of deduction of a higher rate of TDS/TCS under section 206AB and section 206CCA in case of non-filing of return of income.
Also Read:
CBDT Issues Order to Launch Compliance Check Functionality for Section 206AB and 206CCA
Further, section 206AB provides for a higher rate of TDS in the following manner-
(i) Twice the normal rate of TDS
(ii) 5% rate of TDS
Similarly, section 206CCA provides for the collection of TCS at a higher rate in the following manner-
(i) Twice the normal rate of TCS
(ii) 5% rate of TCS
Certain exceptions have been provided from the applicability of the provisions of section 206AB and section 206CCA. The higher rate of TDS/TCS as envisaged in section 206AB/206CCA shall not apply in the following cases-
(i) TDS from Salary under section 192
(ii) TDS on PF withdrawals under section 192A
(iii) TDS on winnings from lottery or crossword puzzle under section 194B
(iv) TDS on winnings from horse race under section 194BB
(v) TDS on purchase of immovable property under section 194-IA
(vi) TDS on payment on rent by an individual or HUF to a resident landlord under section 194-IB
(vii) TDS on income in respect of investment in securitization trust under section 194LBC
(viii) TDS on certain payments made by Individuals/HUF under section 194M
(ix) TDS on Cash withdrawals under section 194N
Section 206AB and section 206CCA provide for special provision for deduction and collection of tax at source respectively, in case of specified persons at higher rates specified therein.
“Specified person” has been defined to mean a person who has not filed the returns of income for both the two assessment years relevant to the two previous years immediately preceding the financial year in which tax is required to be deducted or collected, for which the time limit for 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 Rs. 50,000 or more in each of these two previous years.
Finance Act, 2022 has modified the provision of section 206AB and section 206CCA and reduced the period of two years to one year to provide that “specified person” to mean as a person who has not filed its return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is to be deducted or collected, as the case may be, and the amount of tax collected and deducted at source is Rs. 50,000 or more in the said previous year.
In compliance with the amended provisions, the compliance check utility for section 206AB/206CCA has been modified. In the notification dated 9.6.2022, no significant changes are prescribed in the procedure for using the compliance check tool compared to the procedure laid down for using the ‘Compliance Check Functionality for Section 206AB & 206CCA’ in the notification of 2021.
Read the full text of the DIT(Systems) Notification No. 01/2022 dated 09.06.2022 on Modifications to the ‘Compliance Check Functionality for Section 206AB & 206CCA’
DGIT(S)/ADG(S)-2/Compliance Check/432/2021-22
Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income Tax (Systems)
Notification No. 01 of 2022
New Delhi, 09th June, 2022
Compliance Check Functionality for Section 206AB & 206CCA of Income-tax Act 1961
Section 206AB and 206CCA of the Income-tax Act,1961 (effective from 1st July 2021 and amended via Finance Act, 2022), imposed higher TDS/TCS rate on the "Specified defined as under,
“For the purposes of this section “specified person” means a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted, for which the time limit for furnishing the 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 the said previous year:
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. To facilitate Tax Deductors and Collectors in identification of Specified Persons as defined in sections 206AB and 206CCA, the Central Board of Direct Taxes (“CBDT”), in exercise of powers conferred under section 138(1)(a)(i) of Income-tax Act, 1961 (Act), has issued Order via F.No. 225/67/2021/ITA.II dated 21.06.2021, directing that Director General of Income-tax (Systems), New Delhi shall be the specified income-tax authority for fumishing information to the “Tax Deductor/Tax Collector”, having registered in the reporting portal of the Project Insight through valid TAN, to identify the 'Specified Persons' for the purposes of section 206AB and 206CCA of the Act through the functionality "Compliance Check for Section 206AB& 206CCA".
3. Income Tax Department has released a functionality "Compliance Check for Section 206AB & 206CCA· to facilitate tax deductors/collectors to verify if a person is a “Specified Person” as per section 206AB & 206CCA. This functionality is made available through (https://report.insight.gov.in) of Income-tax Department. Kindly refer to CBDT Circular No. 11 of 2021 dated 21.06.2021 and CBDT Circular No. 10 of 2022 dated 17.05.2022 regarding use of functionality under section 206AB and 206CCA of the Income-tax Act, 1961.
4. The following procedure is laid down for sharing of information with tax deductors/collectors:
a) Registration: Tax Deductors and Collectors can register on the Reporting Portal by logging in to e-filing portal (http://www.incometax.gov.in/) using e-filing login credential of TAN and clicking on the link “Reporting Portal” which is available under “Pending Actions” Tab of the e-filing Portal. After being redirected to the Reporting Portal, the tax deductor/collector needs to select Compliance Check (Tax Deductor & Collector) under Form Type. The details of the principal officer also need to be provided by clicking on “Add Principal Officer” button. The principal officer is the authorized person of the tax deductor/collector to use the Compliance Check functionality on reporting portal. After submission of registration request, email notification will be shared with the Principal Officer along with ITDREIN details and login credentials.
b) Accessing the Compliance Check functionality: Principal Officers of the entities (Tax Deductors & Collectors) which are registered with the Reporting Portal through TAN shall be able to use the functionality after login into the Reporting Portal using their credentials. After successfully logging in, link to the functionality “Compliance Check for Section 206AB & 206CCA” will appear on the home page of the Reporting Portal.
c) Using “PAN Search” mode: Under the “Compliance Check for Section 206AB & 206CCA” page, “PAN Search” tab may be selected to access the functionality in PAN Search mode. In this mode single valid PAN along with captcha can be entered at a time and output will be available with following fields,
• Financial Year: Current Financial Year
• PAN: As provided in the input.
• Name: Masked name of the Person (as per PAN).
• PAN Allobnent date: Date of allotment of PAN.
• PAN·Aadhaar Link Status: Status of PAN-Aadhaar linking for individual PAN holders as on date. The response options are Linked (PAN and Aadhaar are linked), Not Linked (PAN & Aadhaar are not linked), Exempt (PAN is exempted from PAN-Aadhaar linking requirements as per Department of Revenue Notification No. 37/2017 dated 11th May 2017) or Not-Applicable (PAN belongs to non-individual person).
• Specified Person u/s 206AB & 206CCA: The response options are Yes (PAN is a specified person as per section 206AB/206CCA as on date) or No (PAN is not a specified person as per section 206ABl206CCA as on date).
Output will also provide the date on which the “Specified Person” status as per section 206AB and 206CCA is determined.
d) Using "Bulk Search” mode: Under the “Compliance Check for Section 206AB & 206CCA” functionality page, “Bulk Search” tab may be selected to access the functionality in Bulk Search mode. This mode involves following steps:
i Preparing request (input) file containing PANs: Under the “Bulk Search” page, CSV Template to enter PANs details may be downloaded by clicking on “Download CSV template” button. PANs for which “Specified Person” status is required may be entered in the downloaded CSV template. The current limit in the number of PANs in a single file is 10,000.
ii Uploading the input CSV file: Input CSV file may be uploaded by clicking on Upload CSV button. Uploaded file will start reflecting with Uploaded status.
iii Downloading the output CSV file: After processing, CSV file containing "Specified Person" status as per section 206AB & 206CCA of the entered PANs will be available for download and "Status" will change to Available. Output CSV file will contain PAN, Masked Name, Specified Person Status as per section 206AB & 206CCA, PAN-Aadhar Link status and other details as mentioned in paragraph c) above. After downloading of the file, the status will change to Downloaded. The download link will expire and status will change to Expired after specified time (presently 24 hours of availability of the file).
5. For any further assistance, Tax Deduetors & Collectors can refer to Quick Reference Guide on Compliance Check for Section 206AB & 206CCA and Frequently Asked Questions (FAQ) available under “Resources” section of Reporting Portal. They can also navigate to the “Help” section of Reporting Portal for submitting query or to get a call back from Customer Care Team of Income-tax Department. Customer Care Team of Income-tax Department can be reached by calling on its Toll Free number 1800 103 4215 for any assistance.
6. Notification No. 01 of 2021 dated 22nd June 2021 is modified to the extent of what is contained in this notification
7. This issues with the approval of CBDT.
(Manish Mishra)
AOG(Systems)·2 CBDT
Download DIT(Systems) Notification No. 01/2022 dated 09.06.2022 on Modifications to the ‘Compliance Check Functionality for Section 206AB & 206CCA’ in PDF format
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