Declaration of Section 206AB
Declaration of section 206AB, Section 206AB of the Income Tax Act, 1961, was implemented as part of the Union Budget 2021 and has been in effect since July 1, 2021. This provision mandates designated individuals to withhold tax at an increased rate on particular payments made to individuals who have not filed their income tax returns.
According to this section, if a person is liable to make a payment to a non-resident who has not file an income tax return for the preceding year, certain provisions apply. According to this section, if a person is liable to make payments to a non-resident who has not file an income tax return for the past two years, or to a resident whose tax deducted at source (TDS) deduction is equal to or exceeds Rs [amount], certain obligations apply. Rs. 50,000 in each of the previous two years, is require to deduct TDS at twice the applicable rate or at the rate of 5%, whichever is higher.
To adhere to this requirement, the payee (the recipient of the payment) must provide a declaration stating whether they have filed their income tax returns for the specified period. If the payee has not filed their returns, then the tax should be deduct at the higher rate as per Section 206AB. The written Declaration of section 206AB should be obtain using Form No. [Form Number].12BB or in any other prescribed form.
To visit:https://www.incometax.gov.in