Extension of Validity of Nil/Lower Deduction Certificate & Form 15G & 15H

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 31^st 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:

1. New 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 30^thJune 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 1^stApril 2020 to 30^th 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 1^stApril 2020 to 30^th 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 30^thJune 2020 for FY 2020-21. However, in such a case new application for FY 2020-21 is required to furnish on or before 30^th 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 1^stApril 2020 to 30^th 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 1^stApril 2020 to 30^th 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 30^thJune 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

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