Summary of Circular No. 11/2021 on Verifying if Vendor has Filed IT Returns for Previous 2 Years for Purpose of TDS Deduction

*👉🏻CBDT issues Compliance Check Functionality for Section 206AB & 206CCA*

(Circular No.11/2021 - Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961)

*Summary of Circular on Verifying if Vendor has Filed IT Returns for Previous 2 Years for Purpose of TDS Deduction*

Under Sec 206AB and 206CCA, the Deductor has to verify if the Vendor has filed the Return of Income for the Previous 2 years. If not, a higher rate of TDS will be applicable for that particular Vendor.  The Income Tax and CBDT have enabled a new feature and clarified as follows:

🌲 A New Feature called “Compliance Check for Sec 206AB & 206CCA”will be enabled on the IT Website

🌳 The IT Department has already compiled the list of persons who have complied with the provision, as before every compliance date (known as specified persons).

🌴 The Deductor needs to check if the Vendor has complied by feeding the PAN Number.

🌱 If it is confirmed the Vendor has complied, it is enough if the Deductor has noted the compliance once for each Financial Year. It _NEED NOT BE CHECKED BEFORE EACH TRANSACTION IF HE HAS COMPLIED._

🎋 Where a Vendor has not complied, the Deductor will check before each transaction as the Vendor will move out of the specified persons list only after compliance.

🌵Belated returns will also be valid compliances to be removed from the specified persons list if it is filed within the belated due date.