Section 206AB
Provision requiring higher TDS or TCS deduction at twice the prescribed rate (or 5 percent, whichever is higher) from specified persons who have not filed income tax returns for the two preceding years.
Filing window
Deductors must verify non-filer status via TRACES before payment; applicable from 1 July 2021
Regulator
Central Board of Direct Taxes (CBDT)
Regulator
Central Board of Direct Taxes (CBDT)
Deadline
Deductors must verify non-filer status via TRACES before payment; applicable from 1 July 2021
Penalty
Failure to deduct higher TDS renders deductor as assessee-in...
Legal basis
Income Tax Act, 1961
What is Section 206AB?
Provision requiring higher TDS or TCS deduction at twice the prescribed rate (or 5 percent, whichever is higher) from specified persons who have not filed income tax returns for the two preceding years.
- +All Indian employers and payers subject to TDS
- +Foreign-owned Indian subsidiaries
- +EOR providers processing client-funded payroll
Statutory basis
Income Tax Act, 1961
Section 206AB
Enforced by
Central Board of Direct Taxes (CBDT), through TRACES portal compliance check
Citations are editorially curated. Always verify current applicability with qualified Indian counsel before acting on a specific matter.
The stake
Filing window for Section 206AB. Skipping or mishandling this compliance carries direct financial and operational consequences.
Why Section 206AB matters for your GCC
Section 206AB is a income tax and withholding requirement for foreign-owned Indian entities and GCCs. Missing the deductors must verify non-filer status via traces before payment; applicable from 1 july 2021 obligation triggers failure to deduct higher tds renders deductor as assessee-in-default under section 201, and downstream filings or transactions may be blocked until rectification. Most foreign parents discover Section 206AB issues only when a downstream transaction surfaces the prior gap, by which point rectification costs and operational delays have grown materially. Proactive handling avoids these cascading consequences.
The 4 ways Section 206AB goes wrong
Real scenarios from real GCC compliance audits. Each one preventable.
Trap 01
Computing Section 206AB on incorrect wage base or taxable transaction value
Trap 02
Missing the statutory remittance deadline and incurring interest under Section 201(1A)
Trap 03
Submitting incorrect deductee PAN, resulting in TDS credit not reflecting in employee Form 26AS
Trap 04
Failing to file the quarterly statement on time, attracting Section 234E late fee
Done for you
Accounting and Tax
IRPR Network handles Section 206AB as part of our Accounting and Tax service, with timely filings, supporting-document validation, citation tracking, and a zero-penalty compliance calendar.
Our workflow
- 01Identify the trigger event in your GCC operations
- 02Prepare and validate the Section 206AB filing or compliance step
- 03Submit to the regulator and obtain acknowledgement
- 04Track in your compliance calendar for ongoing or recurring obligations
Concepts connected to Section 206AB
These terms are filed together, depend on each other, or share regulatory authority.
Income Tax and TDS
Form 26Q
Quarterly TDS return for non-salary payments such as professional fees, rent, commission, and contractor payments.
Income Tax and TDS
Form 24Q
Quarterly return filed with the Income Tax Department reporting TDS deducted on salaries.
Income Tax and TDS
TDS Section 192
Income Tax Act provision requiring employers to deduct tax at source on salary payments to employees.
Income Tax and TDS
TAN
Unique 10-character alphanumeric identifier required by every person responsible for deducting or collecting tax at source.
Asked about Section 206AB
5 specific questions that GCC operators ask most often, answered with citations to the relevant regulations.
Need help with Section 206AB?
IRPR Network manages Section 206AB as part of Accounting and Tax, with a zero-penalty guarantee.
Explore the serviceQ01What is Section 206AB and who does it apply to?
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Provision requiring higher TDS or TCS deduction at twice the prescribed rate (or 5 percent, whichever is higher) from specified persons who have not filed income tax returns for the two preceding years. For foreign-owned GCCs, Section 206AB applies to all indian employers and payers subject to tds. IRPR Network handles Section 206AB as part of our Accounting and Tax service.
Q02When is Section 206AB due?
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Section 206AB is due deductors must verify non-filer status via traces before payment; applicable from 1 july 2021. Late filing triggers failure to deduct higher tds renders deductor as assessee-in-default under section 201.
Q03What law governs Section 206AB?
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Section 206AB is governed by Income Tax Act, 1961, specifically Section 206AB. The compliance is enforced by Central Board of Direct Taxes (CBDT), through TRACES portal compliance check.
Q04What is the penalty for non-compliance with Section 206AB?
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Non-compliance attracts: Failure to deduct higher TDS renders deductor as assessee-in-default under Section 201 IRPR Network's compliance retainer is designed to prevent these exposures through proactive filing, citation tracking, and a defined compliance calendar.
Q05Who handles Section 206AB for foreign-owned GCCs in India?
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IRPR Network handles Section 206AB end-to-end as part of our Accounting and Tax service. Our team prepares filings, coordinates with regulators, validates supporting documents, and tracks all related deadlines on a defined compliance calendar.
Handle Section 206AB the right way, the first time.
Book a 30-minute consultation. We will map your Section 206AB obligations alongside every other India compliance for your GCC, on one calendar, one retainer.
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