Executive Summary:

The article covers the detailed analysis of the circular issued by the Ministry of Finance bearing Circular No. 11/2021, dated 21st June 2021 with respect to the functionality tab on the Income Tax Department portal, i.e., “Compliance Check for Sections 206AB & 206CCA” of Section 206AB and 206CCA of the Income-tax Act, 1961.

Introduction:
The Finance Act, 2021 has inserted two new sections i.e., 206AB and 206CCA in the Income-tax Act 1961 which takes effect from the 1st day of July 2021. These sections mandate tax deduction (section 206AB) or tax collection (section 206CCA) at a higher rate in case of certain non-filers (specified persons) with respect to tax deductions (other than under sections 192, 192A, 194B, 194BB, I 94LBC and I 94N) and tax collections. The higher rate is twice the prescribed rate or 5%, whichever is higher. These provisions however have the following exceptions:
• A non-resident not having a permanent establishment in India is not a specified person.
• Furthermore, the provisions of Section 206AB do not apply to any aggregate, Income, or any amount spent, yet to be paid or credited on which tax is otherwise deducted at source in accordance with provisions of the chapter XVIIB.

Who will come under the category of Specified Persons?
A Specified person means a person who has not filled the Income-tax returns for the preceding Two Financial years immediately before the previous year in which tax is required to be deducted /collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of section 139 has expired and whose Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.

Special Functionality tab “Compliance Check for Sections 206AB & 206CCA”
To ease the burden on the tax deductor or tax collector, of determining whether he is a specified person, the Income Tax Department has implemented a new “Compliance Check Functionality tab for Section 206AB and 206CCA” so as to assist the TDS and TCS taxpayers in following the compliance requirements of these sections.

Advantages of the Functionality Tab:
Eases compliance burden
This newly introduced tab will reduce the burden of compliance over the concerned parties and increase the efficiency in filing returns of the persons who have not filled the same for the past two years.