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Validity of lower or nil TDS, TCS certificate extended to June 30

Our Bureau New Delhi | Updated on March 31, 2020

Applies to resident as well as non-resident taxpayers

The Finance Ministry on Tuesday notified the extension of validity of all lower withholding tax orders to June 30. This will help in the continuous flow of payments on which Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) is applied at lower rate or NIL rate.

TDS is when payment is made after deducting tax at certain percentage, while TCS refers to collection of tax at certain rates along with payment. In both the situations, tax deducted or collected need to be deposited with the government within a specified time-frame.

The Central Board of Direct Taxes (CBDT), in an order dated March 31, said that for all assesses who have filed 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 FY2019-20, such certificate would be applicable till June 30, 2020. This can be used in respect of transactions and by the deductor/ collector, for whom the certificate was issued for FY 2019-20.

‘Welcome step’

Commenting on the order, Rakesh Nangia, Chairman, Nangia Andersen Consulting, said the order will ensure continuity of payments to contractors/service providers — both resident and non-resident — where for specific reasons — such as character of income, tax treaty benefits, estimated losses, etc, — respective taxpayers were authorised to receive payments, either without deduction of taxes or deduction at a lower rates.

“Such orders are very important for cash flow management of both resident and non-resident taxpayers, and in the present circumstances, where taxpayers and businesses are already facing severe liquidity and cash flow issues, such extension is a much welcome step by the gGovernment,” he said.

The order further mentioned that in cases where the assesses could not apply for issue of lower or nil deduction of TDS/TCS, but hold certificate for FY2019-20, this will be applicable till June 30, 2020.

However, they need to apply at the earliest, giving details of transactions and the deductor/collector to the TDS/TCS Assessing Officer as soon as normalcy is restored or June 30, whichever is earlier.

However, anyone who has neither applied nor holds certificate for FY 2019-20, needs to apply in a modified way.

Published on March 31, 2020

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