Section 206AB & Section 206CCA API

Section 206AB and Section 206CCA have been introduced to Income Tax Act, 1961 under the Finance Act 2021 and will be in effect from 1st July 2021. Section 206AB & Section 206CCA API provides synchronous and asynchronous method for compliance check.

What are Section 206AB and Section 206CCA?

The newly proposed Section 206AB and Section 206CCA mandate a higher deduction/collection rate for a category of “specified person”. The deductee must meet the below criteria to be considered as a Specified person under Section 206AB & Section 206CCA:

  1. The deductee/collectee has not filed the Income Tax Return for the last two assessment years, previous to the year for which the tax is required to be deducted; and
  2. If the aggregate of TDS and TCS for collectee is INR 50,000 or more in each of these two previous years

For such a specified person, Section 206AB dictates a higher deduction rate would be applicable. The higher of the following rate would be applicable:

  • Twice the rate specified in the relevant provision of the Act, or
  • Twice the rates in force or
  • The rate of 5%

For such a specified person, Section 206CCA dictates a higher collection rate would be applicable. The higher of the following rate would be applicable:

  • Twice the rate specified in the relevant provision of the Act, or
  • Twice the rates in force or
  • The rate of 5%

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Note that the specified person shall not include a non-resident who does not have a permanent establishment in India (For the purposes of this sub-section, the expression "permanent establishment" includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.)

How does Section 206AB and Section 206CCA API help?

The synchronous API provides a real-time compliance check that businesses can integrate into their onboarding workflow. While the Compliance Check Post Job Endpoint takes in a list of PAN Numbers and initiates a Job to verify the status of whether the requested PAN numbers fall under the category of Specified Person under Section 206AB and Section 206CCA. This initiates a job for which you can configure a postback to subscribe to the events of completion of this Job.

Available Section 206AB & Section 206CCA APIs

  1. 206AB & 206CCA Sync API: Peform compliance check of PANs and get results in real-time.
  2. 206AB & 206CCA Async API: Perform compliance checks of PAN in bulk using this API by posting a job and getting a postback when its done.