1. Legal Requirement
- Section 206Amandates specified entities to file statements for payments made to residents without TDS deduction (when normally deductible under Chapter XVII-B).
- Rules 31AC & 31ACAprescribe the format, frequency, and procedure.
2. Applicability
- Who Files?:
- Banks/NBFCs (interest payments)
- Companies/LLPs (dividends, professional fees)
- departments (contract payments)
- Threshold Exemption: Only if aggregate payments exceed:
- ₹50,000(for interest under Section 194A)
- ₹1,00,000(for contracts under Section 194C)
3. Key Forms & Due Dates
| FORM | PURPOSE | DUE DATE |
| Form 26AS (Part E) | Auto-populated from payer’s filings | Real-time |
| Form 15H/15G | Declarations for no TDS | Preserved for 7 years |
| Annual Statement | Consolidated non-TDS payments | 31st May (next FY) |
4. Required Details
- Payer: Name, PAN, TAN
- Payee: Name, PAN, address
- Payment: Amount, nature (interest/dividend/etc.), exemption reason
- Verification: Cross-check with PAN-Aadhaar linkage
5. Digital Compliance (2023 Updates)
- Auto-reporting: Through e-TDS/TCS returns
- AIS Integration: Non-TDS payments visible in Annual Information Statement
- Pre-filling: Auto-populated in payee’s ITR
6. Penalties
| DEFAULT | CONSEQUENCE |
| Non-filing | ₹500/day (Section 272A) |
| Incorrect filing | ₹10,000 per error |
| Willful omission | Prosecution (Section 276B) |
7. Practical Examples
- Bank Interest:
-
- Scenario: ₹45,000 paid to retiree (below TDS threshold)
- Action: Report in quarterly statement
- Professional Fees:
-
- Scenario: ₹80,000 to consultant with valid 197 certificate
- Action: File exemption details
8. Recent CBDT Circulars
- 12/2023: Stricter validation of exemption claims
- 18/2024: Mandatory DSCfor corporate filings
Pro Tip: Use the Reporting Portal’s Bulk Upload feature for high-volume payments. Maintain payment-wise records to reconcile with 26AS.
Next Steps:
- Identify reportable paymentsmonthly
- Reconcile with Form 15G/H declarations
- File through TRACESwith digital signature
