Section 206A Income Tax Act: Reporting Interest Paid Without TDS

Section 206A of the Income-tax Act, 1961 required specified payers to report certain interest paid to resident recipients without deduction of tax at source (TDS). It is a reporting provision: the absence of TDS does not necessarily remove the obligation to furnish a prescribed statement.

Current-law update (October 2026): The Income-tax Act, 2025 applies from 1 April 2026, subject to its savings and transitional provisions. The corresponding reporting requirement is contained in section 397(3)(g) of the 2025 Act. Section 206A remains relevant when examining earlier periods under the 1961 Act. Always apply the thresholds and rules governing the relevant period.

Meaning and purpose of Section 206A

The provision, headed Furnishing of statement in respect of payment of any income to residents without deduction of tax, covered information reporting even where interest was paid without TDS. This helps the tax administration reconcile interest income reported by payers with taxpayers' returns and information statements.

Explanation of the statutory provisions

Section 206A(1): specified interest payers

Banking companies, co-operative societies and specified public companies referred to in the proviso to section 194A(3)(i) were required to furnish prescribed statements concerning qualifying interest (other than interest on securities) paid to residents without deduction. The 1961 Act text as amended by the Finance Act, 2025 refers to Rs. 40,000 for banking companies and co-operative societies and Rs. 5,000 in other cases. These figures are historical statutory wording and must not be used as a substitute for the applicable TDS thresholds or the corresponding provisions for tax year 2026-27 onward.

Section 206A(2): other persons notified or required to report

The Central Board of Direct Taxes (CBDT) could require other persons responsible for paying income to residents, where the income was subject to the TDS framework, to furnish prescribed information statements.

Section 206A(3): correction statements

A reporting person could submit a correction statement in the prescribed form to rectify mistakes or add, delete or update previously reported information.

Corresponding provision under the Income-tax Act, 2025

Under section 397(3)(g), the reporting obligation is integrated into the 2025 Act's compliance and reporting provisions. Clause (g)(i) addresses specified banking companies, co-operative societies and public companies paying resident interest within the relevant threshold; clause (g)(ii) provides for additional persons required by the Board to report; and clause (g)(iii) provides for correction statements. The relevant interest threshold is linked to section 393(1), Table, serial number 5, rather than relying on historical fixed amounts from section 206A.

Practical compliance points

Identify whether the payer is within the categories covered by the applicable provision.
Check whether the payment is interest other than interest on securities and whether the recipient is resident.
Determine the relevant tax year and the statutory threshold applicable to that period.
Maintain accurate recipient identification, PAN where applicable, interest amounts and reporting records.
File the statement in the prescribed form and time; use the prescribed correction mechanism where necessary.
Do not confuse reporting without TDS with a general exemption from tax on the recipient's interest income.

Legislative history and earlier text

The uploaded earlier version of this page reproduced the 2005-era section 206A, including references to floppy disks, diskettes, magnetic tape and CD-ROM and earlier limits of Rs. 10,000 and Rs. 5,000. Those descriptions are retained here as legislative history rather than presented as current filing instructions. Section 206A was inserted by the Finance Act, 2005 with effect from 1 June 2005; the Finance Act, 2007 changed the earlier threshold wording, and the Finance (No. 2) Act, 2009 revised the statement-period language. Subsequent amendments added the correction-statement mechanism and changed the reporting framework.

Official legislation and guidance

Frequently asked questions

Does payment of interest without TDS mean no statement is required?

No. Reporting may be required independently under the applicable statutory provision and prescribed rules.

Is section 206A the current section for tax year 2026-27?

No. For the new regime, refer to section 397(3)(g) of the Income-tax Act, 2025 and the relevant rules. Section 206A remains useful for prior periods and transitional matters.

Can an incorrect statement be corrected?

Yes. The legislation provides for correction statements, subject to prescribed form and verification requirements.

This article provides general legal information. Verify the law, rules and notifications applicable to the relevant tax year before filing.