Section 206AA: Applies when the recipient does NOT provide their PAN to the deductor. In such cases, TDS is deducted at the higher of:

• 20%, OR
• Rate specified in the Act, OR
• Rate in force

Section 206AB: Applies to "specified persons" who are non-filers of ITR despite having TDS/TCS ≥ ₹50,000 in each of the two preceding years. TDS is deducted at:

• Twice the normal rate, OR
• Twice the rate in force, OR
• 5%, whichever is higher

Key Difference: 206AA focuses on PAN non-furnishing, while 206AB targets non-filers of income tax returns.

Steps to obtain Section 197 Certificate:

1. Prepare Application: Fill Form 13 with complete details
2. Gather Documents:
   • Computation of estimated income and tax liability
   • Previous years' ITR acknowledgments
   • Proof of deductions/investments (80C, 80D, etc.)
   • Bank statements/interest certificates
3. Submit Online: Log in to Income Tax e-filing portal and submit Form 13 with digital signature
4. AO Review: Assessing Officer will examine your application (usually takes 30-45 days)
5. Certificate Issuance: If approved, certificate will be issued specifying the lower/nil TDS rate
6. Submit to Deductors: Provide the certificate to all persons who deduct your TDS

Validity: Usually valid for one financial year; must be renewed annually.

Major Changes:

1. Increased Thresholds:

• Dividend (194): ₹5,000 → ₹10,000
• Bank interest (non-senior): ₹40,000 → ₹50,000
• Bank interest (senior citizen): ₹50,000 → ₹1,00,000
• Other interest: ₹5,000 → ₹10,000
• Commission/brokerage: ₹15,000 → ₹20,000
• Compensation (194LA): ₹2,50,000 → ₹5,00,000

2. Reduced Rates:

• Insurance commission (194D): 5% → 2%
• Life insurance maturity (194DA): 5% → 2%
• E-commerce (194O): 1% → 0.1%
• Several other sections: 5% → 2%

3. New Sections:

• 194T: Partnership payments (10%)
• 194SP: VDA in-kind payments (1%)

4. Structural Changes:

• 194B/194BB: Now per transaction basis instead of aggregate
• 194I: Monthly threshold (₹50,000) instead of annual (₹2,40,000)

Consequences of Late/Non-Deposit of TDS:

1. Interest under Section 201(1A):

• Rate: 1.5% per month or part thereof
• Period: From date of deduction to date of actual deposit
• Calculation: Simple interest on TDS amount

2. Late Fee under Section 234E:

• ₹200 per day of delay in filing TDS return
• Maximum: Amount of TDS itself

3. Penalty under Section 271C:

• Minimum: ₹10,000
• Maximum: Amount of TDS not deducted/deposited
• Discretionary penalty by Assessing Officer

4. Deemed Assessee in Default (Section 201):

• Deductor treated as assessee in default
• Recovery proceedings can be initiated
• Treated as tax arrears

5. Disallowance of Expense (Section 40(a)(ia)):

• 30% of payment may be disallowed if TDS not deposited
• Applies when filing income tax return

Example: TDS of ₹10,000 deducted on 15th April but deposited on 25th May (40 days late)

• Interest: ₹10,000 × 1.5% × 2 months = ₹300
• Late fee: ₹200 × days of delay in return filing
• Potential penalty: Up to ₹10,000

Methods to Verify TDS Credit:

1. Form 26AS (Annual Tax Statement):

• Login to Income Tax e-filing portal (www.incometax.gov.in)
• Go to "My Account" → "View Form 26AS"
• Check Part A (TDS on non-salary) and Part B (TDS on salary)
• Verify deductor's name, TAN, amount, and period

2. Annual Information Statement (AIS):

• More comprehensive than Form 26AS
• Access through e-filing portal → "Annual Information Statement"
• Shows all tax-related information including TDS
• Allows feedback submission for discrepancies

3. TDS Certificate Matching:

• Compare Form 16/16A received from deductor with Form 26AS
• Check: Deductor name, TAN, amount, quarter, assessment year
• Any mismatch should be reported to deductor immediately

4. TRACES Portal:

• Visit www.tdscpc.gov.in
• Register/login with PAN
• View detailed TDS statements and correction statements

Common Mismatches & Resolution:

Issue	Action
TDS not appearing in 26AS	Contact deductor; verify if return filed; check PAN correctness
Amount mismatch	Cross-verify with certificate; request deductor to file correction statement
Wrong PAN used	Deductor must file correction statement immediately
Quarter/period mismatch	Usually auto-adjusted; if not, contact deductor

Best Practice: Verify TDS credits quarterly rather than waiting until ITR filing time.

Step-by-Step Process:

Step 1: Collect All TDS Certificates

• Form 16 from employer (for salary)
• Form 16A from other deductors (interest, rent, professional fees, etc.)
• Form 16B (for property transactions under 194IA)
• Form 16C (for rent under 194IB)

Step 2: Verify in Form 26AS/AIS

• Download Form 26AS from Income Tax portal
• Match all TDS entries with certificates received
• Note any discrepancies for correction

Step 3: Filing ITR

• Login to Income Tax e-filing portal
• Select appropriate ITR form (ITR-1, ITR-2, ITR-3, etc.)
• Fill income details under respective heads

Step 4: Report TDS in ITR

• Go to "Taxes Paid" section
• TDS details auto-populated from Form 26AS
• Verify all entries are correct
• Add any missing TDS entries manually (if verified from certificates)

Step 5: Calculation

• System calculates total tax liability
• Deducts TDS already paid
• Shows refund due or tax payable

Step 6: Submit ITR

• Review all details carefully
• Submit with DSC/EVC
• E-verify within 120 days

Step 7: Refund (if applicable)

• Refund processed after ITR verification
• Credited to bank account mentioned in ITR
• Usually takes 2-4 weeks after successful e-verification

Important Points:

• TDS credit available only if deductor deposited it with the government
• Credit given in the assessment year of income
• If TDS not in 26AS but you have certificate, still claim it and explain
• Keep all certificates for at least 7 years

Sections Excluded from BOTH 206AA and 206AB:

Section	Nature of Payment	Reason for Exclusion
192	Salary	Follows individual slab rates; PAN mandatory for employment; special provisions apply
192A	EPF Withdrawal	Fixed rate of 10%; linked to employment records; PAN verification through EPFO
194B	Lottery Winnings	Already highest rate of 30%; no scope for further increase
194BB	Horse Race Winnings	Already highest rate of 30%; no scope for further increase
194LBC	Securitisation Trust Income	Special provisions for trust income; different regulatory framework
194N	Cash Withdrawal	Different mechanism based on ITR filing status; already has built-in higher rates for non-filers

Key Observations:

• Total 6 sections excluded from both 206AA and 206AB
• Exclusions are identical for both provisions
• Most exclusions already have high rates (30%) or special mechanisms
• Salary and EPF have separate tracking mechanisms

All Other TDS Sections: Subject to higher rates under 206AA (no PAN) and 206AB (non-filers)

Practical Impact:

• Salaried individuals: No impact of 206AA/206AB on salary TDS
• Lottery winners: Pay flat 30% regardless of PAN/ITR status
• Business payments: Heavily impacted by 206AA/206AB provisions

TDS Deposit Due Dates (Section 200):

Month of Deduction	Due Date for Deposit	Remarks
April to February	7th of the following month	For any month except March
March	30th April	Extended due date for year-end

Example:

• TDS deducted in June → Deposit by 7th July
• TDS deducted in March → Deposit by 30th April

TDS Return Filing Due Dates:

Quarter	Period Covered	Due Date	Form (Salary)	Form (Non-Salary)
Q1	April - June	31st July	24Q	26Q / 27Q
Q2	July - September	31st October	24Q	26Q / 27Q
Q3	October - December	31st January	24Q	26Q / 27Q
Q4	January - March	31st May	24Q	26Q / 27Q

Form Types:

• Form 24Q: TDS return for salary payments (Section 192)
• Form 26Q: TDS return for non-salary payments (other than 194IA, 194IB, 194M)
• Form 27Q: TDS return for payments to non-residents
• Form 26QB: TDS return for property transactions (194IA)
• Form 26QC: TDS return for rent by individuals/HUF (194IB) and certain payments (194M)

TDS Certificate Issuance Due Dates (Section 203):

• Form 16 (Salary): By 31st May (following financial year)
• Form 16A (Non-Salary): Within 15 days of filing quarterly TDS return
• Form 16B (Property): Within 15 days of filing Form 26QB
• Form 16C (Rent): Within 15 days of filing Form 26QC

Consequences of Missing Due Dates:

• Late Deposit: Interest @ 1.5% per month (Sec 201(1A))
• Late Filing: Late fee of ₹200 per day (Sec 234E), maximum up to TDS amount
• Late Certificate: Penalty of ₹100 per day (Sec 272A(2)(k)), minimum ₹10,000

Best Practices:

• Deposit TDS immediately after deduction
• Maintain a quarterly calendar for return filing
• Issue certificates promptly after return filing
• Keep buffer time before due dates