Sub: Tax Deduction at Source (TDS) for FY 2021-22 at Higher Rate for non-filers of Income Tax Returns

Ref:  New section 206AB introduced under the Income Tax Act, 1961 with effect from 01 July 2021 by the Finance Act, 2021.

This has reference to the amendment introduced in the Income Tax Act, 1961 (‘the Act’) by insertion of new section 206AB with effect from July 1, 2021 requiring deduction of tax at higher rate for non-filers of the Income Tax Returns.

In terms of the provisions of the said new section 206AB of the Act, TDS shall be deducted at the rates as tabulated hereunder in cases where the person is a non-filer of Income Tax Return for two previous years immediately preceding the current financial year, for which the due-date of filing of return of income u/s 139(1) has not expired.

Section Description TDS Rate for ITR Filers TDS Rate for Non ITR Filers as per section 206AB w.e.f July 1, 2021
    Ind/HUF Others Ind/HUF Others
194C Payments to Contracts 1% 2% 5% 5%
194H Commission or Brokerage 5% 5% 10% 10%
194I Rent        
  Use of machinery or plant or equipment 2% 2% 5% 5%
  Others 10% 10% 20% 20%
194J Fees for Professional or Technical Services
10% 10% 20% 20%
194Q Payment for purchase of goods 0.1% 0.1% 5% 5%


In light of the aforesaid amendment, we request you to provide confirmation and acknowledgement of Income Tax returns filed in ITR-V for the two immediately preceding financial years for which the due-date of filing of return of income (as applicable to you) has expired, to enable us to deduct TDS at the applicable rates for FY 2021-22.

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