Section 206AB of Income Tax Act for AY 2023-24

Section 206AB of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules, 1962. Deduction of TDS for non-filers of ITR.

Amended and updated notes on section 206AB of Income Tax Act 1961 as inserted by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to special provision for deduction of tax at source for non-filers of income-tax return (ITR).

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 206AB of IT Act 1961 provides for special provision for deduction of tax at source for non-filers of income-tax return.

Recently, we have discussed in detail section 206AA (Requirement to furnish Permanent Account Number) of IT Act 1961.

Today, we learn the provisions of section 206AB of Income-tax Act 1961 as amended by the Finance Act 2022. The amended provision of section 206AB is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 206AB of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-206AB: Special provision for deduction of tax at source for non-filers of income-tax return

[Section 206AB newly inserted by the Finance Act 2021 and amended w.e.f. 1-April-2022 by the Finance Act 2022]

Section 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 sections 192, 192A, 194B, 194BB, 194-IA, 194-IB, 194LBC, 194M or 194N on any sum or income or amount paid, or payable or credited, by a person 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.

[Sub-section(1) of section 194AB amended (substituted and omitted) w.e.f. 1-April-2022 by the Finance Act 2022]

Section 206AB (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.

Section 206AB (3):

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:

[Sub-section(3) of section 194AB amended (substituted) w.e.f. 1-April-2022 by the Finance Act 2022]

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.


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