The Central Board of Direct Taxes (CBDT) issued clarification on issuance for lower rate or nil deduction or collection of Tax Deduction at Source (TDS) or Tax Collected at Source (TCS).
The board received the representation seeking further clarification on the order passed on March 31, 2020.
The Central Board of Direct Tax (CBDT), on Thursday, issued the clarification to the order of certificates for lower rate/nil deduction/collection of TDS or TCS under Section 195, 197 and 206C (9) of the Income Tax Act, 1961 when Assessee was given such certificate for the Financial year 2019-20 and when the assessee is applying or applied for the first time for such certificate.
The Board, while clarifying the issue of the validity period of lower/nil deduction/collection certificates of Financial Year 2019-20 said that, “For the purpose of Para 2 (a) and 2 (b) of the order dated March 31, the lower/nil deduction/ collection certificates will be valid for the particular period for which these were issued for FY 2019-20 and also for a further period from April 1 to June 30 for FY 2020-21 subject to conditions as mentioned in the order dated March 31.”
It was further stated that threshold/transaction limit mentioned in lower/nil deduction/collection certificate issued for FY 2019-20 will be taken fresh for the period from April 1 to June 30 for FY 2020-21 and the amount of threshold limit will be the same as was assigned for these certificates for FY 2019-20.
“Office emails or other means of communication must be used by field authorities of the Income Tax Department for internal approval for issue of a lower rate or nil deduction or collection certificates,” the clarifications said.
Regarding the issue of new/different TAN mentioned for lower/nil deduction/collection application for FY 2020-21 or revision of rates mentioned in certificates of FY 2019-20, CBDT stated, “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 in the application, the relaxation as provided in Para 2(a) and 2(b) of the order dated March 31 shall not apply to such cases and they have to apply afresh as per procedure, mentioned in an annexure of the order.”
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