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Certificate of Lower Rate/ Nil Deduction of TDS or TCS from Income Tax Department

By gkkedia Dt. May 30th, 2020

Issue of certificates for lower rate/nil deduction/collection of TDS or TCS u/s 195, 197 and 206C (9) of the Income Tax Act, 1961 for FY 2020-21
Due to the corona virus outbreak in India, the tax payers are facing hardships in fulfilling the compliances and so do the income tax department. In view of the hardships caused due to COVID-19 to the tax payers and to the Income Tax Department, the CBDT on 31.03.2020 has extended the validity of lower or nil rate TDS and TCS Certificates for FY 2020-21 till 30th June, 2020.

To mitigate the hardships of the payees and buyers/ licenses/ lessees, the CBDT has issued the following clarifications/ directions by exercise of powers u/s 119 of the Income Tax Act, 1961.

Scenario 1:
If assessee has already applied for the lower or nil rate TDS/TCS Certificate on the trace portal for FY 2020-21
If the certificate has been issued for FY 2019-20 and application for the lower or nil rate TDS/ TCS certificate has also been applied for the FY 2020-21 and the application is pending for disposal then the validity of the certificate issued for FY 2019-20 will be till 30.06.2020 of F.Y. 2020-21 or till the date their applications applied for the FY 2020-21 are disposed off, whichever is earlier.

In other words, if the certificate was issued for a F.Y.2019-20, then the validity of certificate has been extended for the period 1.4.2020 to 30.06.2020 for the FY 2020-21 or till the date applications are disposed off, whichever is earlier.

Scenario 2:
If the assessee hasn’t applied for the lower or nil rate TDS/TCS Certificate on the trace portal for FY 2020-21
If the assessee has not applied for the lower or nil rate TDS/ TCS certificate for FY 2020-21 but assessee was having the certificate for the FY 2019-20, then said certificate will be valid up to 30.06.2020. However, assessee shall have to apply for the certificate for FY 2020-21 as soon as things become normal or on or before 30.06.2020, whichever is earlier.

Scenario 3:
If the assessee hasn’t applied for the lower or nil rate TDS/TCS Certificate for FY 2020- 21 and not having certificate for FY 2019-20
In this case, assessee shall have to apply for the certificate. Modified procedures has been laid down for the application.
The applicant will apply for the certificate u/s 197/ 206C(9) through an e-mail addressing to the Assessing Officer containing the following documents-

  • Duly filled in Form 13 (Annexure 1 and/or Annexure III)
  • The documents/ information as required to be uploaded on TDS-CPC website while
    Filing up of Form 13
  • Projected Balance Sheet and P & L account for FY 2020-21
  • Provisional Balance Sheet and P & L account for FY 2019-20
  • Balance Sheet and P & L account for FY 2018-19
  • Form 26AS for FY 2019-20 and 2018-19
  • ITR pertaining to FY 2018-19

 
Further, for the certificates u/s 195(2) and 195(3) of the Income Tax Act, 1961, the process of furnishing the application will continue to be same with the modification that the application will be filed via email and certificates will be issued by email.

Furthermore, the certificate will be issued up to 30.06.2020 or earlier, the same will be communicated to the applicant by the Assessing Officer. The Assessing Officer will communicate the issuance of certificate through e-mail containing following info:

S. NO. TAN of the deduct or PAN of the Deductee Financial Year Section under which TAX T source is to be deducted/collected Estimated Amount Of/sum to be received/paid Aplicable rate of deduction/
collection
Valid From Date Valid to Date

 
Scenario 4:
If payment made to Non-residents (including foreign companies) having Permanent Establishment in India and are not covered in scenario 1 and 2
In this case, tax on payments made will be deducted at the rate of 10% including surcharge and cess till 30.06.2020 of F.Y. 2020-21, or disposal of their applications whichever is earlier.

Such calculations, computations and compliance might be complex and intricate. Hence, consulting an Indian Chartered Accountants Firm may reduce the possibility of any defaults in obtaining the certificate for lower rate/ nil deduction/ collection of TDS or TCS u/s 195, 197 and 206C of the Income Tax Act, 1961 for the FY 2020-21.

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