Understanding Section 206AB in Income Tax: Impact on Businesses and Individuals

 Understanding Section 206AB in Income Tax is crucial for taxpayers to avoid excessive tax deductions. Introduced to enforce tax compliance, this section levies a higher TDS (Tax Deducted at Source) rate on those who fail to file their ITR for two consecutive years.

How Does Section 206AB Affect Businesses and Individuals?

  1. Higher TDS for Non-Filers – If your TDS exceeds ₹50,000 annually and you haven't filed ITR for two years, a higher rate applies.
  2. Burden on Businesses – Companies must verify vendors' tax compliance before making payments to avoid non-compliance penalties.
  3. Impact on Freelancers & Professionals – Higher tax deductions on professional fees can affect cash flow.
  4. Relevance for Investors & Landlords – Dividend income, rental payments, and fixed deposit interests may attract higher TDS.

For a detailed breakdown, SMC has explained this very well on "Understanding Section 206AB in Income Tax", offering valuable insights into compliance.

Taxpayers must ensure timely ITR filing to avoid unnecessary deductions. Staying updated on Understanding Section 206AB in Income Tax will help individuals and businesses manage their financial obligations smoothly.

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