Section 206AB Omitted: Current TDS Position for 2026-27 & ERP Cleanup
Current position for TY 2026-27: Section 206AB was omitted with effect from 1 April 2025. A deductor should not apply a higher TDS rate to a current transaction merely because the payee did not file an earlier income-tax return.
What changed?
Section 206AB created a separate higher-rate test for specified non-filers. The Finance Act, 2025 removed that compliance layer from 1 April 2025. Section 206CCA, the corresponding TCS provision, was also omitted.
What still needs checking?
| Check | Current action |
|---|---|
| Correct TDS provision | Identify the current section/table item for the payment |
| Threshold | Apply the current threshold |
| 206AB non-filer test | Do not apply to current deductions |
| PAN | Check PAN-related higher-rate consequences separately |
| Lower/nil certificate | Verify current validity and limit |
| Historical transaction | Apply the law that governed the original period |
ERP cleanup checklist
- Search vendor and tax masters for “206AB”, “specified person” and “non-filer higher rate”.
- Disable obsolete escalation for current transactions.
- Preserve historical logic/data for periods when the section applied.
- Test missing-PAN and lower-certificate scenarios separately.
- Update SOPs and maker-checker checklists.
Example
A resident vendor is paid in September 2026 and has not filed an earlier ITR. Do not increase TDS solely because of that non-filing status under old Section 206AB. Determine TDS under the current payment provision and separately check PAN/certificate rules.
Frequently asked questions
Is Section 206AB applicable in TY 2026-27?
No. It was omitted with effect from 1 April 2025.
Does non-filing of ITR alone trigger higher current TDS?
Not under Section 206AB. Other applicable TDS and PAN rules must still be checked.
Should ERP 206AB flags be removed?
Disable them for current deductions while preserving historical audit data.
Can Section 206AB still matter for an old notice?
Yes, if the notice concerns a period when the provision was in force.
Official reference
Last reviewed: September 2026.
More Frequently Asked Questions
What changed?
Section 206AB created a separate higher-rate test for specified non-filers. The Finance Act, 2025 removed that compliance layer from 1 April 2025. Section 206CCA, the corresponding TCS provision, was also omitted.
What still needs checking?
Check Current action Correct TDS provision Identify the current section/table item for the payment Threshold Apply the current threshold 206AB non-filer test Do not apply to current deductions PAN Check PAN-related higher-rate consequences separately Lower/nil certificate Verify current validity and limit Historical transaction Apply the law that governed th
What should I know about ERP cleanup checklist?
Search vendor and tax masters for “206AB”, “specified person” and “non-filer higher rate”. Disable obsolete escalation for current transactions. Preserve historical logic/data for periods when the section applied. Test missing-PAN and lower-certificate scenarios separately. Update SOPs and maker-checker checklists.
What should I know about Example?
A resident vendor is paid in September 2026 and has not filed an earlier ITR. Do not increase TDS solely because of that non-filing status under old Section 206AB. Determine TDS under the current payment provision and separately check PAN/certificate rules.
What should I know about Frequently asked questions?
Is Section 206AB applicable in TY 2026-27? No. It was omitted with effect from 1 April 2025. Does non-filing of ITR alone trigger higher current TDS? Not under Section 206AB. Other applicable TDS and PAN rules must still be checked. Should ERP 206AB flags be removed? Disable them for current deductions while preserving historical audit data. Can Section 206A
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