RSM India

Newsflash - CBDT Orders us 119 and Related Clarifications issued on 31 March, 3 April and 9 APril 2020 on Issuance of Lower NIL RATE TDS TCS Certificates

The The CBDT has released a series of order under Section 119 and clarification with respect to ambiguity surrounding the issue of Lower Rate / Nil Rate certificates for Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) under the provisions contained in Section 195, 197 and 206C(9) for FY 2020-21 & FY 2019-20. The pro-activeness shown by the CBDT to issue Orders under Section 119 and additional clarification (i.e. 31 March 2020, 3 April 2020 and 9 April 2020) to provide relief to businesses affected by Covid-19 is a welcome measure.

In this regard, CBDT Order dated 31 March 2020 & Clarification dated 9 April 2020 provides clarifications with respect to applications (either made nor not made) for FY 2020-21. Whereas, CBDT Order dated 3 April 2020 provides clarifications with respect applications made for FY 2019-20 and are pending to be disposed by the TDS- Assessing officers (‘AO’).

On 9 April 2020, the CBDT issued clarificatory order pertaining to LDC / Nil certificates for the first quarter of FY 2020-21, which provided much needed clarity on many significant aspects.

The highlights of which are as under:

Ø    Existing certificates continue to be valid for the period from April 2020 to June 2020 - Certificates issued in FY 2019-20 shall be valid for the period for which issued in FY 2019-20 and also for the period upto 30 June 2020, subject to the conditions as specified in Order dated 31 March 2020.

Ø    Fresh threshold / transaction limit to be considered for April 2020 to June 2020 based on certificate issued for FY 2019-20 – In cases where the assessee already had LDC for FY 2019-20, the threshold / transaction limit shall be taken afresh for the period from 01.04.2020 to 30.06.2020 and the threshold limit shall be the same as was assigned for such certificates issued for FY 2019-20. This is subject to the conditions as specified in Order 31 March 2020.

Ø    Relaxation to tax authorities w.r.t. approvals and communication - Relaxation provided to the income-tax authorities for issue of approval and communication of lower / nil deduction / collection certificates through official emails or other electronic communication for internal approval of applications & communication of the same.

Ø    Rate as per LDC for FY 2019-20 not applicable in the following cases and applications to be made as per procedure prescribed in Order dated 31 March 2020:

(a)   Where the application made for FY 2020-21 covers cases of new / different TAN.

(b)   Where the taxpayer wants revised rate (lower than the rate issued for FY 2019-20) due to impact of Covid-19 outbreak on business.

In the enclosed newsflash, we have endeavored to cover the above clarifications as well as procedural aspects on the captioned subject for FY 2020-21 and FY 2019-20 in a tabular form for ease of reference.

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