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Extension of validity for Lower TDS Deduction or TCS Collection Certificate

On account of the global pandemic (here used for Covid-19), the Prime Minister of India, Shri Narendra Modi had announced a 21 Day lockdown on the evening of March 24, 2020 to be observed in the entire nation. Various notifications and orders have since been issued under different finance and tax laws prevailing in India to provide for waivers of late fee / penalty, extension of due dates, reduction in rate of interests etc, inter alia, mainly to address the operational difficulties faced by the citizens. Here we shall discuss about one of such measures taken by the government lately under the Income Tax Act where the Central Board of Direct Taxes (hereinafter referred to as ‘CBDT’) has exercised its powers and issued an order U/s 119 of the Income Tax Act, 1961 vide F.No. 275/25/2020-IT(B) dated 31 March 2020 to extend the validity of the Lower or Nil TDS Deduction Certificate obtained U/s 195 and 197 or Lower or Nil TCS Collection Certificate obtained U/s 206C(9). The order has broadly categorized the situation of the assessee into three categories- Category 1 – The assessee has filed the online application for lower or nil deduction of TDS / TCS for the FY 2020-21 and is pending for disposal however, the same assessee had been issued similar certificate for the FY 2019-20. Category 2 – The assessee could not file the online application for lower or nil deduction of TDS / TCS for the FY 2020-21 however, the same assessee had been issued similar certificate for the FY 2019-20. Category 3 - The assessee could not file the online application for lower or nil deduction of TDS / TCS for the FY 2020-21 and the same assessee did not have any such certificate for the FY 2019-20 as well. The below table can be useful for an assessee to determine the category:

Categories explained Application filed for FY 2020-21 Certificate available for FY 2019-20 Intention to file application for FY 2020-21
Category 1 ? ? NA
Category 2 × ? ?
Category 3 × × ?

For assessees classified under any category above, given below is the remedy provided by the CBDT:

Categories Validity of Certificate obtained for FY 2019-20 Action Required
Category 1 Earliest of: a.     30 June 2020; or b.    Disposal of the application for FY 2020-21.  
Category 2 30 June 2020 Such assessees are instructed to file their application for FY 2020-21 prior to 30 June 2020 in accordance with a special procedure laid down.
Category 3 NA Such assessees are instructed to file their application for FY 2020-21 prior to 30 June 2020 in accordance with a special procedure laid down.

*Any payments done to Non-residents including the foreign companies, who have PE in India and not covered under category 1 or 2 above, TDS @ 10% (including surcharge and cess) has to be deducted upto 30 June 2020 or disposal of their applications, whichever is earlier. For any assistance in filing the applications of Lower or Nil Deduction of TDS for the FY 2020-21, we shall be pleased to assist and can discuss a way forward.

 

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