CBDT amends functionality – Compliance Check for Section 206AB & 206CCA

Circular No. 10/2022, dated 17-05-2022

The Finance Act, 2021, has inserted two new Sections 206AB and 206CCA, with effect from 01-07-2021. These sections provide for deduction or collection of tax at a higher rate in the case of non-filers (specified person) of return of income.

The Central Board of Direct Taxes (CBDT) vide Circular no. 11/2021, dated 21-06-2021, had issued a new functionality ‘Compliance Check for Sections 206AB & 206CCA’ to ease the compliance burden on tax deductor or collector.

To ensure that all the persons whose significant tax has been deducted or collected do furnish their return of income, the Finance Act 2022 has rationalized the provisions of sections 206AB and 206CCA. It has been provided that the provisions of these sections shall not apply to tax to be deducted under sections 194-IA, 194-IB, and 194M. Further, a person shall be treated as a specified person based on the return filing status of the last 1 year instead of the earlier 2 years.

Accordingly, the CBDT has amended the logic of the functionality ‘Compliance Check for Sections 206AB & 206CCA’. The new logic for the Financial Year 2022-23 is as under:

a) A list of specified persons is prepared at the start of the financial year 2022-23 taking the previous year 2020-21 as the relevant previous year.
b) Such a list contains names of the taxpayers who did not file the return of income for the assessment year 2021-22 and have an aggregate of TDS and TCS of Rs. 50,000 or more in the previous year 2020-21. During the financial year 2022-23, no new names are added to the list of specified persons.
c) If any specified person files a valid return of income (filed & verified) for the assessment year 2021-22 during the financial year 2022-23, his name would be removed from the list of specified persons. This would be done on the date of filing the valid return of income.
d) If any specified person files a valid return of income (filed & verified) for the assessment year 2022-23, his name would be removed from the list of specified persons. This would be done when such a person files return of income.
e) If the aggregate of TDS and TCS in the case of a specified person, in the previous year 2021-22 is less than Rs. 50,000, his name would be removed from the list of specified persons. This would be done on the first due date under section 139(1) falling in the financial year 2022-23, i.e., 31st July 2022.
f) Belated and revised TCS & TDS returns of the relevant financial year filed during the financial year 2022-23 would also be considered for removing persons from the list of specified persons.

Note: A person cannot file the return of income for the Assessment Year 2021-22 during the Financial Year 2022-23 (except in specified circumstances). Hence, relief has been granted by the Dept. by removing the name of the person from the list of specified persons if he files the return of income for the Assessment Year 2022-23 in the Financial Year 2022-23. On a similar note, the name would be removed in the Financial Year 2022-23 if the aggregate of TDS and TCS of a specified person is less than Rs. 50,000 in the previous year 2021-22.

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