Union Budget 2025-26 (Full) + Finance Bill, 2025

XXI. Removal of higher TDS/TCS for non-filers of return of income

Section 206AB of the Act, requires deduction of tax at higher rate when the deductee specified therein is a non-filer of income-tax return. Section 206CCA of the Act, requires for collection of tax at higher rate when the collectee specified therein is a non-filer of income-tax return. This is subject to other conditions specified in the two sections.

2. Representations were received from various stakeholders that it is difficult for the deductor/collector, at the time of deduction/collection, to verify whether returns have been filed by the deductee/collectee, resulting in application of higher rates of deduction/collection, blocking of capital and increased compliance burden.

3. Accordingly, to address this issue and reduce compliance burden for the deductor/collector, it is proposed to omit section 206AB of the Act and section 206CCA of the Act.

4. These amendments will take effect from the 1st day of April, 2025.

[Clauses 65, 66 & 68]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Higher TDS/TCS for non-filers removed, easing withholding obligations and reducing verification and compliance burden for payors. The proposal omits provisions imposing higher rates of deduction and collection for non-filers of income-tax returns, responding to stakeholder concerns that payors face difficulty verifying filing status and bear increased compliance and capital blockage; the amendment is intended to simplify withholding obligations and reduce verification burdens, effective from the first day of April, 2025.