Central Board of Direct Taxes (CBDT) by issuing an order on dated 31.03.2020 under section 119 of the Income Tax Act, 1961, has clarified that, due to outbreak of COVID-19 pandemic, existing certificate issued for FY 2019-20 for lower or nil rate of deduction of TDS and lower or nil rate of collection of TCS, shall be valid till 30.06.2020.
In the order, CBDT says that there is a severe disruption in the normal working of almost all sectors and Income Tax department is no exception. So in such scenario application filed by the payees under section 195 and 197 of the act for lower or nil rate of deduction of TDS and application filed by the buyers/licensees/lessees under section 206C (9) of the act for lower or nil rate of collection of TCS for FY 2020-21, have not been attended in a timely manner by the officers, which is causing hardship to the taxpayers.
After considering the above facts, CBDT has issued following direction and clarification to field officers to mitigate the hardship of taxpayers and to dispose off the filed application at the earliest:-
a) If certificates had been issued to assessee for FY 2019-20 and they have filed an application for FY 2020-21:- All the assessees who have filed an application for lower or nil deduction of TDS/TCS on the Traces Portal for FY 2020-21 and whose applications are pending for disposal as on date and they have been issued such certificates for FY 2019-20, then such certificates would be applicable till 30.06.2020 of FY 2020-21 or disposal of their applications by the Assessing Officers, whichever is earlier, in respect of the transaction and the deductor or collector if any for whom the certificate was issued for FY 2019-20.
b) If certificates had been issued to assessee for FY 2019-20 and they have not filed an application for FY 2020-21:- In cases where the assessees could not apply for issue of lower or nil deduction of TDS/TCS on the Traces Portal for the FY 2020-21, but were having the certificates for FY 2019-20, such certificate will be applicable till 30.06.2020 of FY 2020-21. However, they need to apply at the earliest giving details of the transactions and the Deductor/Collector to the TDS/TCS Assessing Officer as per procedure laid down in sub-para (c) below, as soon as normalcy is restored or 30.06.2020, whichever is earlier.
c) If no certificates had been issued to assessee for FY 2019-20 and they have not filed an application for FY 2020-21:- In cases where the assessee has not applied for issue of lower or nil deduction of TDS/TCS on the Traces Portal, and he is also not having any such certificate for FY 2019-20, a modified procedure for application and consequent handling by the TDS/ITS Assessing Officer is laid down which is enclosed as Annexure.
d) Payment to non-resident including foreign companies having a permanent establishment in India and not covered by (a) and (b) above:- Tax on payments made will be deducted at the rate of 10% including surcharge and cess, on such payments till 30.062020 of FY 2020-21, or disposal of their applications, whichever is earlier.
Application for Lower/Nil deduction certificate: The applicant shall apply for the lower/nil deduction/collection certificate under section 197/206C(9) of the Income Tax Act vide an email addressed to the assessing officer concerned. The email shall contain date/documents as under:-
1. Duly filled in Form 13 (Annexure-I and/or Annexure-III).
2. The documents/information as required to be uploaded on the TDS-CPC website while filling up Form 13.
3. Projected Balance Sheet and Profit and Loss account for FY 2020-21.
4. Provisional Balance Sheet and Profit and Loss account for FY 2019-20.
5. Balance Sheet and Profit and Loss account for FY 2018-19.
6. Form 26AS for FY 2019-20 and 2018-19.
7. Income Tax Return pertaining to FY 2018-19.
For issue of certificate for lower/nil deduction of tax under 195(2) and 195(3), the process of furnishing of applications will continue to be the same with the modification that applications will be filed via email and certificate will also be issued via email.
Issuance of the Certificate:- The certificate(s) shall be issued up to 30.06.2020 or any other date (earlier than 30.06.2020) as specified by AO. The assessing officer shall communicate the issuance of certificate vide mail containing the following information:-
|TAN of the deductor
|PAN of the deductor
|Section under which Tax at source is to be deducted/ collected
|Estimated amount of income/ sum to be received/ paid
|Applicable rate of deduction/ collection
|Valid from Date
|Valid to Date
The issuance of the certificate shall be communicated to the applicant who in turn shall share the same with the deductor/collector.