Higher tax deduction for non filers increases withholding rates on payments to specified persons who default on returns.

A special withholding regime requires tax to be deducted at a higher rate on payments to a specified person who has not filed returns for the two relevant assessment years and whose aggregate withheld and collected tax meets a threshold in each year; the provision operates notwithstanding other provisions and interacts with the existing higher withholding rule so that the higher applicable rate governs, and excludes non residents without a permanent establishment in India.

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