Income Tax

Removal of higher TDS/TCS u/s 206AB / 206CCA CCA for non-filers of return of income

Removal of higher TDS/TCS u/s 206AB / 206CCA CCA for non-filers of return of income w.e.f. 01.04.2025

Section 206AB of the Income Tax Act, 1961 requires deduction of tax at higher rate when the deductee specified therein is a non-filer of income-tax return. Section 206CCA of the Act, requires for collection of tax a higher rate when the collectee specified therein is a non-filer of income-tax return. This is subject to other conditions specified in the two sections. 

The Finance Minister in her Union Budget 2025-26 budget speech stated that representations were received from various stakeholders that it is difficult for the deductor/collector, at the time of deduction/collection, to verify whether returns have been filed by the deductee/collectee, resulting in application of higher rates of deduction/collection, blocking of capital and increased compliance burden. 

Accordingly, to address this issue and reduce compliance burden for the deductor/collector, it is proposed to omit section 206AB of the Act and section 206CCA of the Act. 

These amendments will take effect from the 1st day of April, 2025.

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