Due to outbreak of the pandemic COVIT-19, there is severe disruption in the normal working of almost all the sectors of economy including income tax department. In such a scenario, to mitigate hardships of assessee as well as officers, the CBDT issues various direction / clarifications by exercising of its powers

A. Extension of Validity of Nil/Lower deduction certificate

CBDT vide order dated 31st March 2020, extended the validity of Nil/lower TDS/TCS deduction certificate by three month for all the assesse who are holding Nil/lower TDS/TCS deduction certificate for the finance year 2019-20. Accordingly, the old certificate, which was valid for FY 2019-20 only, shall be valid till 30.06.2020 subject to the following directions / clarifications issued by CBDT:

1New Application filed and pending and holding certificate for FY 2019-20:

>In case where the assessee who have already applied online for new application for FY 2020-21 and application is pending for dispose and he has Nil/lower TDS/TCS deduction certificate for the FY 2019-20, then such certificate shall continue to be valid till 30thJune 2020 for FY 2020-21 or disposal of their application by the AO, whichever earlier.

>Threshold limit mentioned in the Nil/lower TDS/TCS deduction certificate issued for the FY 2019-20, will be taken fresh for period from 1stApril 2020 to 30th June 2020 for FY 2020-21 (further clarified by CBDT on dated 09-04-2020);

>However, the relaxation provided shall be applicable only for the payee/ taxpayer TAN mentioned in the Nil/lower TDS/TCS deduction certificate issued for the FY 2019-20. No Nil/lower deduction shall be apply for the new/different TAN mentioned in the application for FY 2020-21. (further clarified by CBDT on dated 09-04-2020);

>Rate of TDS/TCS mentioned in the old certificate, shall continue apply for the period from 1stApril 2020 to 30th June 2020 for FY 2020-21. If assessee want different/lower rate from rate mentioned in the old certificate, he will have to apply fresh; (further clarified by CBDT on dated 09-04-2020);

2. New application yet to file and holding certificate for FY 2019-20: 

> In case where the assessee could not apply for new application for FY 2020-21 but he had Nil/lower TDS/TCS deduction certificate for the FY 2019-20, then such certificate shall continue to be valid till 30thJune 2020 for FY 2020-21. However, in such a case new application for FY 2020-21 is required to furnish on or before 30th June 2020.

> Threshold limit mentioned in the Nil/lower TDS/TCS deduction certificate issued for the FY 2019-20, will be taken fresh for period from 1stApril 2020 to 30th June 2020 for FY 2020-21; (further clarified by CBDT on dated 09-04-2020);

> However, the relaxation provided shall be applicable only for the payee/ taxpayer TAN mentioned in the Nil/lower TDS/TCS deduction certificate issued for the FY 2019-20. No Nil/lower deduction shall be apply for the new/different TAN mentioned in the application for FY 2020-21. (further clarified by CBDT on dated 09-04-2020);

> Rate of TDS/TCS mentioned in the old certificate, shall continue apply for the period from 1stApril 2020 to 30th June 2020 for FY 2020-21. If assessee want different/lower rate from rate mentioned in the old certificate, he will have to apply fresh; (further clarified by CBDT on dated 09-04-2020);

3. New application yet to file and does not hold certificate for FY 2019-20:

1.3.1 Payment to Resident:

  • In such a case where the assessee is not having any Nil/lower TDS/TCS certificate for the financial year 2019-20 and willing to take Nil/lower TDS/TCS certificate for financial year 2020-21, shall be liable to deduct TDS and collect TCS at normal rate as applicable and will have to apply online for new Nil/lower TDS/TCS certificate for financial year 2020-21 under modified procedure and shall be issued certificate up to 30-06-2020.

1.3.2 Payment to Non-resident 

  • The payment to non-resident (including foreign companies) having PE in India and not covered in 1 & 2 above, tax on payment made will be deducted at the rate of 10% including surcharge and cess, on such payment till 30thJune 2020 for FY 2020-21 or disposal of there

4. Direction for staff and assessee:

CBDT directed that official emails or electronic communication may be used by field authorities of income tax department for internal approval for issued of lower/Nil deduction /collection certificates and for communication of the same.

B. Extension of validity of Form 15G and 15H:

> CBDT has clarified that if a person had submitted Form 15G and 15H for FY 2019-20 to banks and other institutions then these forms will be valid up to 30.06.2020 for FY 2020-21 also. (Clarification dated 03-04-2020);

> Further, it is reiterated that the payer who has not deducted TDS on the basis of side form 15G/15H, shall require to report details of such payment/credit in the TDS statement for the quarter ending 30.06.2020.

Let’s analysis the effect in details

To discuss the effects of the above provisions in detail specific for your business, you may mail us at somvirkataria@live.in

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We are in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. We handle the litigation matters in assessment and appeal. We provide expert advice in Transfer Pricing and International Taxation. We also deal in Government Grant and Incentive Scheme provided by central and View Full Profile

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