CLARIFICATION
REGARDING SHORT DEDUCTION OF TDS/TCS DUE TO INCREASE IN RATES OF SURCHARGE BY
FINANCE (NO.2) ACT, 2019: IT CIRCULAR NO. 8/2020
Circular No. 8/2020
No. 370133/5/2020-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
*****
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)
*****
Room No. 1478-H, North Block, New Delhi
Dated 13th April, 2020
Dated 13th April, 2020
Subject:
Clarification regarding short deduction of TDS/TCS due to increase in
rates of surcharge by Finance (No.2) Act, 2019-reg.
The
Finance (No.2) Bill,2019 was tabled in Lok Sabha on 5th July, 2019
which was passed by both the houses of Parliament and became Finance
(No.2) Act, 2019 (the Act} which received assent of the President on 1st
August, 2019. The Act provided for increase in the rate of surcharge as
under:
S.No.
|
Income slab
|
Surcharge before the Act
|
Enhanced surcharge as provided by the Act
|
l
|
Less than 50 lakh rupees
|
Nil
|
Nil
|
2
|
50 lakh rupees but less than 1 crore rupees
|
10%
|
10%
|
3
|
I crore rupees but less than 2 crore rupees
|
15%
|
15%
|
4
|
2 crore rupees but less than 5 crore rupees
|
15%
|
25%
|
5
|
5 crore rupees and above
|
15%
|
37%
|
2.
The enhanced rates of surcharge were applicable from the 1st day of
April, 2019 for previous year 2019-20 relevant to assessment year
2020-21. Thus, every person as referred to above was required to compute
his tax liability after taking into account the enhanced rates of
surcharge. Further, TDS/TCS under various provisions of the Income-tax
Act is required to be deducted/ collected after taking into account the
enhanced rate of surcharge.
3.
Several cases have come to the notice of the Central Government wherein
deductors/ collectors were held to be an assessee in default for short
deduction of TDS/short collection of TCS in cases where final
transaction was done before laying of the Finance (No.2) Bill, 2019 in
the Parliament, i.e. 5th July, 2019. Since the transaction was completed
before the rates of enhanced surcharge were announced and the concerned
deductee/payee is required to furnish their Income-tax return for the
relevant assessment year, it has been requested that in such cases,
deductor or collector should not be held to be an assessee in default
under section 201 of the Income-tax Act.
4.
The above issue has been examined by the Board and in this regard, it
is clarified a person responsible for deduct ion/collection of tax under
any provision of the Income-tax Act will not be considered to be an
assessee in default in respect of transactions where:-
a)
such transaction has been completed and entire payment has been made to
the deductee/payee on or before 5th July, 2019 and there is no
subsequent transaction between the deductor/collector and the
deductee/payee in the financial year 2019-20 from which the shortfall of
tax could have been deducted/collected by the deductor/collector;
b)
TDS has been deducted or TCS has been collected by such
deductor/collector on such sum as per the rates in force as per the
provisions prior to the enactment of the Act;
c)
such tax deducted or collected has been deposited in the account of
Central Government by the deductor/collector on or before the due date
of depositing the same;
d) TDS/TCS statement has been furnished by such person on before the due date of filing of the said statement.
5
However, if the person fails to fulfill any of the conditions as laid
down above, such a person will, with respect to short
deduction/collection, not be eligible for benefit provided under this
circular.
6.
Further, if the deductor/collector has deducted/collected shortfall of
tax after 5th of July, 2019 from the transaction(s) made subsequently
after the said date, interest, if any, for delay in deduction/collection
of such tax shall not be levied.
7.
The above relaxation docs not absolve the deductee/payee to pay proper
tax including enhanced surcharge by advance tax or self-assessment tax
and file return of income after paying such tax.
This issues with the approval of Finance Minister.
(Ankit Jain)
Dy. Commissioner of Income-tax (OSD)
TPL Division
Dy. Commissioner of Income-tax (OSD)
TPL Division
Source: [https://www.incometaxindia.gov.in/communications/circular/circular_8_2020.pdf]