CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 206A — Statement re Payment of Interest Without Deduction (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. An information-reporting provision; mechanical.
Finance Act, 2026: No amendment.
Mechanism: Banks/co-operative societies/public companies must file a quarterly statement of interest (other than on securities) paid to residents without deduction; penalty under section 271FB for default.
Litigation profile: Negligible. A mechanical reporting provision — the candour rule applies.
A. SECTION COMMENTARY
Section 206A requires a banking company, co-operative society or public company that pays a resident interest (other than interest on securities) without deducting tax — because the payment is below the deduction threshold or is otherwise not liable to deduction — to nonetheless prepare and deliver to the prescribed income-tax authority a quarterly statement of such interest paid. It is a reporting (information) provision: it captures, for the tax administration, the trail of interest paid without deduction, so that the recipients' income can be matched even where no TDS arose.
Information, not collection
Section 206A does not impose a deduction or a charge; it imposes a duty to report. Its purpose is to feed the Annual Information Statement / data-matching systems with details of below-threshold or non-deductible interest, complementing the deduction provisions by closing the information gap they would otherwise leave. Non-compliance is dealt with through the statement-default machinery (penalty under section 271FB for the specific failure to furnish the section 206A statement).
A mechanical reporting provision — candour
Section 206A is mechanical and is not litigated on its own terms. In candour, there is no body of section 206A merits authority; it is applied from its terms and the prescribed forms.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
206A. (1) Any banking company or co-operative society or public company referred to in the proviso to clause (i) of sub-section (3) of section 194A responsible for paying to a resident any income not exceeding forty thousand rupees, where the payer is a banking company or a co-operative society, and five thousand rupees in any other case by way of interest (other than interest on securities), shall prepare such statement in such form, containing such particulars, for such period, verified in such manner and within such time, as may be prescribed, and deliver or cause to be delivered the said statement to the prescribed income-tax authority or to the person authorised by such authority.
(2) The Board may require any person, other than a person mentioned in sub-section (1), responsible for paying to a resident any income liable for deduction of tax at source under Chapter XVII, to prepare such statement in such form, containing such particulars, for such period, verified in such manner and within such time, as may be prescribed, and deliver or cause to be delivered the said statement to the income-tax authority or the authorised person referred to in sub-section (1).
(3) The person responsible for paying to a resident any income referred to in sub-section (1) or sub-section
(2) may also deliver to the income-tax authority referred to in sub-section (1), a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under the said sub-sections in such form and verified in such manner, as may be prescribed.
C. AUTHORITIES
Candour rule observed: section 206A is a mechanical information-reporting provision with no merits authority. The statutory scheme is offered.
Statutory backdrop — reporting of interest paid without deduction
Information provision; penalty under section 271FB
Principle: Section 206A requires banks/co-operative societies/public companies to file a quarterly statement of interest (other than on securities) paid without deduction; it is an information provision (feeding data-matching), with penalty under section 271FB for default — it imposes no charge or deduction.
Use: Characterises the provision as reporting, not collection.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 206A — Statement re Payment of Interest Without Deduction (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live. An information-reporting provision; mechanical.
Finance Act, 2026: No amendment.
Mechanism: Banks/co-operative societies/public companies must file a quarterly statement of interest (other than on securities) paid to residents without deduction; penalty under section 271FB for default.
Litigation profile: Negligible. A mechanical reporting provision — the candour rule applies.
A. SECTION COMMENTARY
Section 206A requires a banking company, co-operative society or public company that pays a resident interest (other than interest on securities) without deducting tax — because the payment is below the deduction threshold or is otherwise not liable to deduction — to nonetheless prepare and deliver to the prescribed income-tax authority a quarterly statement of such interest paid. It is a reporting (information) provision: it captures, for the tax administration, the trail of interest paid without deduction, so that the recipients' income can be matched even where no TDS arose.
Information, not collection
Section 206A does not impose a deduction or a charge; it imposes a duty to report. Its purpose is to feed the Annual Information Statement / data-matching systems with details of below-threshold or non-deductible interest, complementing the deduction provisions by closing the information gap they would otherwise leave. Non-compliance is dealt with through the statement-default machinery (penalty under section 271FB for the specific failure to furnish the section 206A statement).
A mechanical reporting provision — candour
Section 206A is mechanical and is not litigated on its own terms. In candour, there is no body of section 206A merits authority; it is applied from its terms and the prescribed forms.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
206A. (1) Any banking company or co-operative society or public company referred to in the proviso to clause (i) of sub-section (3) of section 194A responsible for paying to a resident any income not exceeding forty thousand rupees, where the payer is a banking company or a co-operative society, and five thousand rupees in any other case by way of interest (other than interest on securities), shall prepare such statement in such form, containing such particulars, for such period, verified in such manner and within such time, as may be prescribed, and deliver or cause to be delivered the said statement to the prescribed income-tax authority or to the person authorised by such authority.
(2) The Board may require any person, other than a person mentioned in sub-section (1), responsible for paying to a resident any income liable for deduction of tax at source under Chapter XVII, to prepare such statement in such form, containing such particulars, for such period, verified in such manner and within such time, as may be prescribed, and deliver or cause to be delivered the said statement to the income-tax authority or the authorised person referred to in sub-section (1).
(3) The person responsible for paying to a resident any income referred to in sub-section (1) or sub-section
(2) may also deliver to the income-tax authority referred to in sub-section (1), a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under the said sub-sections in such form and verified in such manner, as may be prescribed.
C. AUTHORITIES
Candour rule observed: section 206A is a mechanical information-reporting provision with no merits authority. The statutory scheme is offered.
Statutory backdrop — reporting of interest paid without deduction
Information provision; penalty under section 271FB
Principle: Section 206A requires banks/co-operative societies/public companies to file a quarterly statement of interest (other than on securities) paid without deduction; it is an information provision (feeding data-matching), with penalty under section 271FB for default — it imposes no charge or deduction.
Use: Characterises the provision as reporting, not collection.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.