The Government is planning to specify a certain category of taxpayers to pay their entire tax liability for FY 2019-20 in advance, which means such persons shall be required to pay tax even before they got to know their full income and the TDS applicable to it.

The new rules shall apply to the taxpayers, whose self -assessment tax liability for FY 2019-20 exceeding Rs. 1 lakh must pay all the amount by July 31, 2020, else penal interest of 1 percent per month under section 234A of the Income-Tax Act would be levied on any short payment of this.

However, the final deadline for institutions like banks and other deductors to file of tax at source shall be required to file TDS returns and grant a TDS certificate for the previous quarter of FY 2019-20 is July 31 and August 15, 2020, respectively.

Such assesses whose tax has been deducted at source under the provisions of the Income –Tax Act for transactions such as interest paid on cumulative fixed deposits, salary, etc.usually pay income, and the TDS on it, simply when the numbers cross the limit specified and it starts replicating either in their Form 26AS on the income –tax website or in a situation when the deductor issues the related TDS certificates to them.

However, normally these figures start to show in Form 26AS only after the deductor files its TDS return with the income tax department. As the last date by which the deductors have to issue TDS certificates for the last quarter of F.Y.

Primarily, the types of income on which the TDS is deducted, include interest received on fixed deposits with banks, non-banking finance companies, corporates, etc. and the salary paid by employers to their employees wherever applicable.

It is possible to know the amount of tax liability for an individual, from these sources, however, the exact amount paid and the applicable TDS from those payments could only be estimated once, the details are available in the TDS form 26AS of the assessee concerned and only then, a TDS certificate can be issued.

Although some individuals have already filed their TDS returns and accordingly issuing TDS certificates, still many of them have time to do so till July 31, 2020, and there is time for the issue of the TDS certificate.

Conclusion:

Consequently, there are higher chances of confusion among taxpayers to assess their incomes properly and pay TDS in advance and thus, will be unable to conduct self-assessment for the tax payable on their total income precisely by July 31st therefore, minimizing the chances to pay their taxes properly by July 31st. Otherwise, the taxpayers may end up paying more to avoid penal interest and will need to claim a refund for the extra amount.

But, the intention of the government to intend the taxpayers to submit the full self-assessment tax by July 31st even though they may not be able to know their exact income and TDS by then. The cut-off dates were ahead of the prescribed deadline in the normal provisions for submission of the self-assessed tax to file the ITRs for most of the assesses i.e. July 31st, 2020.

For the FY 2019-20, the government has stretched deadline filing and submitting ITR till November 30th, 2020 and the last date for payment of full self-assessment tax for FY2019-20 is till July 31, 2020,  primarily for having a self-assessment tax liability exceeding Rs. 1 lakh.

As a consequence of which, inconsistencies have occurred which shall be the same till the time government amends such notification, thereby obligating the taxpayers to estimate their liability in advance and make payments to avoid penalties under section u/s 231A of the Income-Tax Act 1961.

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