In Budget 2021, a new mandate regarding the TDS/ TCS rules was introduced by the government. This new mandate specified that a person who has not filed ITR (Income Tax Return) for the past two fiscal years will be subject to higher/ double TDS rates from July 1st, 2021.

Now, keeping in tune with the new section 206AB, which was framed to execute the rules of higher TDS, the banks, mutual fund houses and companies can now verify if a person has filed ITR, provided his/her income exceeds the TDS limit, starting from the 1st of July, 2021. And these monetary institutions can also levy higher/ double the specified TDS amount in case the person hasn’t filed ITR in the previous fiscal years.

Further, the tax department has also introduced a facility called compliance check utility which has made it easier for the tax deductors to check whether or not you have filed ITR

Want to know more about how the banks, mutual fund houses and firms are planning to levy higher TDS/ TCS rates for ITR non-filers? Well, then, delve into the following sections!

When will greater TDS/TCS apply?

As per the new Section, 206 AB introduced by the Finance Act, 2021, a person will have to pay double/ higher TDS/ TCS rates if the following conditions apply. 

  • If the person has not filed ITR for the past two consecutive financial years, i.e, 2018-19 and 2019-20, for which the due date has lapsed according to section 139(1) of the Indian Income Tax laws.
  • The total TDS/ TCS amount paid in each of these years is more than Rs. 50,000.

Point to Note:

An individual will not be subject to higher TDS/ TCS rates if he/ she has filed a belated ITR or filed an ITR as a response to a notice released by the Tax Department. In other words, Section 206 AB will not be applicable in these cases.

Compliance Check Facility for Section 206AB and 206CCA

As per a circular released by the Income Tax Department, a new facility called Compliance Check for Section 206AB and 206CCA has been started by the CBDT (Central Board of Direct Taxes). 

With the help of this portal, the banks or mutual fund houses can easily check if you have filed ITR using PAN, provided your income exceeds the specified limit. After this, the institution concerned can decide whether to tax the income at normal specified rates or at higher/ double TDS rates, as mentioned in the newly introduced section 206AB.

According to the circular, the banks or the companies (the tax collector/ deductor) only need to enter the PAN of the person concerned (deductor/ collector) on the new portal. This reporting portal will then answer the deductor/ collector on whether to charge higher TDS or normal TDS rates on the income of the individual concerned.

How can you remove your name from the list released by the Tax Department?

The circular that discussed the initiation of the new facility, Compliance Check for Section 206AB and 206CCA also mentioned that the Tax Department will have a list ready by the beginning of the fiscal year 2021-22. This list will comprise the names of individual taxpayers who have not filed ITR for the fiscal years 2018-19 and 2019-20 by the beginning of the financial year, 2021-22 in spite of being subject to TDS/ TCS deduction over Rs. 50 thousand in each of these years.

Good news? The June circular also mentioned ways through which one can have their name removed from the list. 

Here’s how the names on the portal can be removed.

  • If the person who has not filed ITR for FY 2018-19 and 2019-20 decides to file them in the fiscals 2020-21, then his name would be removed. Since the due dates for filing the ITR for 2018-19 and 2019-20 have already expired, there’s no way to file the ITR now, unless the IT department sends you a notice to file ITR.
  • An individual can have his name removed if he has filed a valid ITR for the financial year 2020-21. The taxpayer needs to ensure that the ITR is verified once it’s filed to have the name removed. Now, since the due date for filing the ITR for 2020-21 has been set to September 2021, one can have the name removed only after the expiry of the deadline.

Moreover, the circular mentioned that no new names would be added to the list. Thus, the deductors like banks, mutual funds and companies will verify whether you have filed ITR only once during fiscal 2020-21 while deducting taxes from the accrued income. If your name is not mentioned in the list, you will continue paying taxes at the normal specified rates. 

Nevertheless, in case you are charged higher TDS rates in spite of having a valid ITR filed in 2020-21, make sure you contact the concerned institution to re-check the list and ask them to deduct normal TDS rates.


The new rule on higher TDS has been initiated by the government to keep a clear account of the income of the citizens. And, having deductors of TCS/ TDS like banks and mutual fund houses verify whether one has filed an ITR or not is a step to keep a check on the non-filers and make them file the same by deducting higher TDS rates.

Now that you hold a somewhat clear idea of how the new rules might work, we suggest you skim through the details, file your ITR on time and avoid paying higher TDS rates.

And if you need further information, don’t hesitate to call us!