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CBDT's clarification related to issue of TDS certificates..

The tax department has issued clarifications concerning the difficulty of certificates for a lower deduction, collection of TDS, TCS.

To mitigate the hardships of taxpayers, the Central Board of Direct Taxes (CBDT) on April 9, 2020 provided clarification on orders under Section 119 of the Income-Tax Act, 1961, concerning the difficulty of certificates for lower deduction/collection of TDS/TCS. Earlier on April 4, 2020* (see the reference below), thanks to outbreak of the Covid-19 pandemic, and so as to mitigate the hardships of taxpayers, the CBDT had issued the directions/clarifications by exercise of its power u/s 119 of the Income-tax Act, 1961. The recent clarifications are in response to certain representations made by the taxpayers and people who deduct TDS.

Issuance of validity period of lower/nil deduction/collection certificate for FY 2019-20

CBDT stated, in the order dated March 31 (see the reference below), the lower/nil deduction/ collection certificates are going to be valid for the actual period that these were issued for FY 2019-20 and also for an extra period from April 1 to June 30 for FY 2020-21 subject to conditions as mentioned within the order dated March 31.

For example, if a certificate was issued from a period from 1.10.2019 to 15.12.2019, an equivalent are going to be valid for FY 2019-20 for the amount from 1.10.2019 to 15.12.2019 and for FY 2020-21, an equivalent shall be valid from 01.04.2020 to 30.06.2020 subject to conditions mentioned within the Order dated 30.03.2020.

Threshold/transaction limit mentioned in lower/nil deduction/collection certificate issued for financial year 2019-20.

For the aim of Para 2 (a) and a couple of (b) of the order dated March 31 (see the reference below), the lower/nil deduction/ collection certificates issued for FY 2019-20, are going to be taken fresh for period from 01.04.2020 to 30.06.2020 for FY 2020-21 and therefore the amount of threshold limit are going to be an equivalent as was assigned for these certificates for FY 2019-20 subject to conditions mentioned within the Order dated 30.03.2020.

Issuance of approval and communication of lower/nil deduction/collection certificate

Here, CBDT has clarified that official emails or other transmission could also be employed by field authorities of tax Department for internal approval for issue of lower/nil deduction/collection certificates and for communication of an equivalent .

Issuance of new/different TAN mentioned for lower/nil deduction/collection application for FY 2020-21

CBDT stated that, “In case the payee or buyer/licensee/lessee taxpayer had a certificate for a lower deduction for FY 2019-20 and an application has been made for FY 2020-21 for a new/different TAN mentioned within the application, the relief as provided in Para 2(a) and 2(b) of the order dated March 31 (see the reference below) shall not apply to such cases and that they need to apply afresh as per the procedure.

Similarly, if the rates of TDS/TCS mentioned in old certificates are higher and therefore the taxpayer wants a revision of the rates in sight of the impact of COVID-19 outbreak on its business, the relief as provided in Para 2(a) and 2(b) of the order dated March 31 (see the reference below) shall not apply to such cases and that they will need to follow the procedure mentioned within the annexure of the order and apply afresh.

The CBDT had also in an earlier direction so as to mitigate the hardships of small taxpayers, had decided that if an individual, had submitted valid Forms 15G and 15H to the Banks or other financial institutions for F.Y. 2019-20, then these Forms would be valid up to 30.06.2020, this may safeguard the tiny tax payers against TDS where there's no liabilities.

Reference: 
1.) Order u/s 119 of the Income-tax Act, 1961 on issue of certificates for lower rate/nil deduction/collection of TDS or TCS u/s 195, 197 and 206C(9) of the Act for Financial Year 2019-20​

2.) Order u/s 119 of the Income-tax Act, 1961 regarding submission of Form 15G and 15H for Financial Year-2020-21​


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