Fintech API

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.

Get 206AB and 206CCA API

What are section 206AB and 206CCA?

As per Income Tax Act, Section 206AB and section 206CCA deals with higher TDS (Tax deduction and source) and TCS (Tax collection at SOurce) rates respectively.

Who is a specified person?

Income Tax Act, Section 206AB and 206CCA inserted in the Income-tax Act,1961 (effective from 1st July 2021), imposed a higher TDS/TCS rate on the “Specified Persons’ defined as under,

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

  • A person who has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be collected, for which the time limit of filing a 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 each of these two previous years.

What is the applicability of sections 206AB AND 206CCA?

Income tax act, Section 206AB, and 206CCA (tax deduction at source and tax collection at source) are not applicable to a non-resident who does not have a permanent establishment in India. Furthermore, the provisions of section 206AB do not apply to any sum or income or the amount paid or payable or credited on which tax is otherwise deducted at source under the below-mentioned provision of Chapter XVIIB:

  • Section 192 – Salary
  • Section 192A – Premature withdrawal of EPF
  • Section 194B – Winnings from any lottery or card games or crosswords or puzzles
  • Section 194BB – Winnings from any horse race
  • Section 194LBC – Income in respect of investment in securitization trust
  • Section 194N – Payments of certain amounts/amounts in cash

What are rate applicable?

Tax Deduction at Source u/s 206AB:

  • Twice at the rates prescribed in the relevant provisions of the Income Tax Act.
  • At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
  • At five percent.

Tax Collection at Source u/s 206CCA:

  • At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
  • At five percent.

What are the 206AB Tax deduction API and 206CCA Tax Collection API?

The Tax deduction API and Collection API enables a quick compliance check in any transaction concerning TDS deduction or TCS collection. The industry covered under sections are:

  • Forex
  • Vehicle/ Transportation
  • Cryptocurrency, NFT, VDAs (Under Budget 2022, Finance Minister Nirmala Sitharaman introduced Section 194S to impose TDS on the transfer of cryptocurrency and other VDAs (Virtual Digital Assets). Section 194S is effective from 1st July 2022).
  • Jewelry/ Ornaments
  • Property, etc.

Use of  Tax deduction API and Tax collection API

Tax deduction API ( TDS API) and Tax collection API (TCS API) allow you to do a bulk search (without any restriction on the input number of PANs) or a single PAN search. You would be required to pass the direct PAN number for a single PAN search or can upload a file containing PANs in a Bulk search.

Advantage of Tax deduction API and Tax collection API:

  • Enables easy and quick specified person status check for individuals.
  • Supports bulk mode without any restriction on the number of input PANs.
  • Drastically reduces manual efforts required for the status check and supports digital transformation.

FAQ

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 integrate 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.