Income Tax Relief for Non-Filers of ITR, New income tax notification issued

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CBDT exempt RBI from Higher TDS deduction under Section 206AB of Income Tax Act, 1961

CBDT exempt RBI from Higher TDS deduction under Section 206AB of Income Tax Act, 1961

The Central Board of Direct Taxes (CBDT) has issued a notification exempting the Reserve Bank of India (RBI) from the higher Tax Deducted at Source (TDS) rates stipulated under Section 206AB of the Income Tax Act, 1961. This exemption is outlined in Notification No. 45/2024, dated May 27, 2024.

Section 206AB of the Income Tax Act, 1961, is a special provision aimed at ensuring higher TDS rates for taxpayers who do not file their income tax returns. Specifically, it mandates a higher TDS rate for any deductee who has not filed their return of income for the assessment year relevant to the previous financial year, provided that the time limit for filing the return under Section 139(1) has expired and the aggregate TDS and TCS in that year is ₹50,000 or more.

Exemptions under Section 206AB(3) Sub-section (3) of Section 206AB lists certain entities exempted from this higher TDS rate. These exemptions include:

  1. Non-residents without a permanent establishment in India.
  2. Persons notified by the Central Government in the Official Gazette, who are not required to furnish an income tax return for the relevant assessment year.

Notification Details In accordance with clause (ii) of sub-section (3) of Section 206AB, the CBDT has officially notified that the RBI is exempt from the higher TDS rate despite the non-filing of an income tax return. This notification ensures that the RBI is not subject to the stringent TDS provisions aimed at non-filers, recognizing the unique status and operational nature of the central bank.

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