206AB and 206CCA API

Tax deduction at source (TDS) and Tax Collection at Source (TCS) under Sections 206AB and 206CCA are the latest addition to the Income Tax Act. The introduction of the new sections is for imposing higher TDS/ TCS rates on the persons falling under the “Specified Person” category as per the act. The new section is applicable from the 1st of July, 2021.
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What are Section 206AB and 206CCA?

As per the Income Tax Act, Section 206AB and Section 206CCA deal with higher TDS (Tax Deduction at Source) and TCS (Tax Collection at Source) rates, respectively.

Who is a Specified Person?

Sections 206AB and 206CCA of the Income Tax Act, 1961 (effective from 1st July 2021), impose a higher TDS/TCS rate on "Specified Persons" defined as follows:

For the purposes of this section, a “specified person” means:

  • A person who has not filed income tax returns for the last two assessment years before the current tax year, and the due date for filing under Section 139(1) has expired.
  • The aggregate TDS and TCS amount is ₹50,000 or more in each of these two years.

Applicability of Sections 206AB and 206CCA

These sections do not apply to non-residents without a permanent establishment in India. Additionally, Section 206AB does not apply to income subject to TDS under the following sections:

  • Section 192 – Salary
  • Section 192A – Premature withdrawal of EPF
  • Section 194B – Lottery or card game winnings
  • Section 194BB – Horse race winnings
  • Section 194LBC – Securitization trust investments
  • Section 194N – Cash payments above certain limits

Applicable Tax Rates

Tax Deduction at Source (TDS) under Section 206AB:

  • Twice the rate prescribed in the Income Tax Act.
  • The rate specified in the Finance Act.
  • 5% if the above conditions do not apply.

Tax Collection at Source (TCS) under Section 206CCA:

  • The rate specified in the Finance Act.
  • 5% if the above condition does not apply.

206AB Tax Deduction API and 206CCA Tax Collection API

The Tax Deduction API and Collection API enable quick compliance checks for TDS and TCS transactions in the following industries:

  • Forex
  • Vehicle/Transportation
  • Cryptocurrency, NFT, VDAs (Section 194S for TDS on digital assets effective 1st July 2022)
  • Horse race winnings (Section 194BB)
  • Jewelry/Ornaments
  • Property transactions

Use of Tax Deduction and Collection API

The API allows bulk or single PAN searches for easy compliance verification. You can provide a direct PAN number for a single search or upload a bulk file containing multiple PANs.

Advantages of Tax Deduction and Collection API

  • Enables quick verification of a specified person’s status.
  • Supports bulk processing without input restrictions.
  • Reduces manual effort and supports digital transformation.
FAQs
What are the conditions for the applicability of sections 206AB and 206CCA?
  • Payment or collection is made to/ from a person who has not filed his ITR for 2 years immediately prior to the previous year in which TDS is required to be deducted or TCS is required to be collected for which time limit for filing the ITR u/s 139(1) 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
If TDS/TCS has to be deducted/collected on 25-August-2021, then which two years ITRs should have been filed to be a non-specified person?
As of 25-August-2021, two immediately preceding Financial Years in which the due date of filing ITR expired are FY 2018-19 and FY 2019-20. So, the person should have filed ITRs for these two Financial Years to avoid the applicability of the 206AB and 206CCA sections.
How to integarte TDS API or TAX API?
Please share your requirement here on Contact US our team will get in touch with you and help you to understand more about Tax Deduction at Source API, Tax Collection at Source API, and Tax API.
Can we create an automation flow to check TDS for 206AB and 206CCA?
Yes, you can create an automation flow to check taxation by using TDS API and Income Tax API.
How to Check TDS?
Checking TDS is a very simple process when it comes to individual TDS Check as you can log in to the income tax portal and check. But for corporates where they need to check bulk TDS and TCS, it’s time-consuming. For this purpose, corporates can use TDS check API.
Is it a complex process to use TDS API , TCS API or income TAX API?
No, it’s plug and play API that helps you automate the journey within a few minutes.