Circular No. 11/2021

What it does

Explains the two new sections that the Finance Act, 2021 inserted with effect from 1 July 2021. Section 206AB requires deduction, and section 206CCA collection, at a higher rate where the payee or buyer is a specified person. The higher rate is twice the prescribed rate or 5 per cent, whichever is higher. A specified person is one who has not filed the return of income for both of the two assessment years relevant to the two previous years immediately preceding the year of deduction or collection, counting only previous years for which the section 139(1) filing date has expired, and whose aggregate of tax deducted and collected was rupees fifty thousand or more in each of those two previous years.

Why it was issued

The two sections took effect from 1 July 2021 and the Board issued the circular on the use of the functionality built to identify specified persons.

Who it reaches

Deductors who must test every payee from 1 July 2021 onwards
Collectors testing buyers under section 206CCA
Payees who have not filed returns for the two relevant years
Payroll and accounts teams, though salary under section 192 is outside the higher rate

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.139	s.2, s.263, s.349
s.192	s.392, s.402
s.206AB	no counterpart recorded
s.206CCA	no counterpart recorded

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it. The reading also stopped short of the end of the document: what is below is the opening, not the whole of it.

Circular No. II of 202 J F. No. 3701331712021-TPL Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) Dated: 21 June, 2021 Sub.: Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961- reg. Finance Act, 2021 inserted two new sections 206AB and 206CCA in the Income-tax Act 1961 (hereinafter referred to as "the Act") which takes effect from 1st day of July, 2021. These sections mandate tax deduction (section 206AB) or tax collection (section 206CCA) at higher rate in case of certain non-filers (specified persons) with respect to tax deductions (other than under sections 192, 192A, 194B, 194BB, 194LBC and 194N) and tax collections. Higher rate is twice the prescribed rate or 5%, whichever is higher. Specified person means a person who satisfies both the following conditions: -

(i) He has not filed the returns of income for both of the two assessment years relevant to the two previous years immediately before the previous year in which tax is required to be deducted/collected. Two previous years to be counted are required to be those whose return filing date under sub-section (1) of section 139 has expired.

(ii) Aggregate of tax deducted at source and tax collected at source is rupees fifty thousand or more in each of these two previous years.

What to watch

Deductions under sections 192, 192A, 194B, 194BB, 194LBC and 194N are excluded — the higher rate does not touch them.
Both conditions must be met together: non-filing for both years and rupees fifty thousand or more of tax deducted and collected in each of those years. One alone is not enough.
Only previous years whose section 139(1) date has already expired are counted, so a year still open for filing does not go into the test.
The higher rate is the greater of twice the prescribed rate and 5 per cent, not simply double.

Where you meet it

When checking a vendor before deduction, or on a short-deduction demand raised under section 201 for having deducted at the ordinary rate for a specified person on or after 1 July 2021.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 112/2026 [F. No. 300196/6/2026-ITA-I] / SO 4458(E) : Notification in the case of District Legal Service Authority, Panchkula — Ministry of Finance 11 August 2026
Notification No. 107/2026 [F. No. 300196/65/2018-ITA-I] / SO 4319(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 106/2026 [F. No. 300196/65/2018-ITA-I] / SO 4318(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 104/2026 [F.No.300196/1/2026-ITA-I] / SO 4308(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of District Legal Service Authority, Charkhi Dadri — Ministry of Finance 3 August 2026
Notification No. 103/2026 [F. No.300196/76/2024-ITA-I] / SO 4307(E) :Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Haryana State Board of Technical Education (HSBTE), Panchkula — Ministry of Finance 3 August 2026
Notification No. 101/2026 [F. No. 300196/88/2024-ITA-I] / SO 4190(E) : Notification section 536 (1) of the Income Tax Act 2025 (30 of 2025) in the case of Kerala Real Estate Regulatory Authority — Ministry of Finance 29 July 2026

← Circular No. 12/2021 · Circular No. 10/2021 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is