CBDT Issues Clarification on Orders for Validity of Lower TDS Certificates

cbdt-issues-clarification-on-orders-for-validity-of-lower-tds-certificates

CBDT has issued a clarification on 09.04.2020 in the form of questions and answers to clarify the difficulties and confusions that have arisen from the issue of Order dated 31.03.2020 and Order dated 03.04.2020 issued u/s 119 of the Income Tax Act relating to extension of Validity of Lower or Nil TDS/TCS Certificates u/s 197, 195 and u/s 206C(9) till June 30 and speedy disposal of the applications so far filed for issue of Lower or Nil TDS/TCS Certificates for FY 2019-20 and FY 2020-21.

These orders were issued to provide relief to the taxpayers arising from the outbreak of pandemic COVID-19.

Further, CBDT has also made temporary arrangement of disposal and issue of lower TDS / TCS certificates u/s 197, 195 or 206C(9) through e-mail due to disruption in conducting regular business by the assessees as well as the tax officers.

In view of the hardships faced by taxpayers due to the COVID-19 pandemic, CBDT had issued an Order dated 31.03.2020 to ease the process of issue of certificates for lower rate/nil deduction/collection of TDS or TCS w.r.t. FY 2020-21. The order has also addressed the case of a first-time applicant for certificate u/s 197. The Order further stated that where the application is pending disposal as on date for FY 2020-21 but a similar certificate was issued in FY 2019-20, then the certificate for FY 2019-20 shall remain valid till 30.06.2020.


All the assessees who have filed an application for lower or nil deduction of TDS/TCS for F.Y. 2020-21 and whose applications are pending for disposal as on date and they have been issued such certificates for F.Y. 2019-20, then such certificates would be applicable till 30.06.2020 of F.Y. 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 F.Y. 2019-20. In cases where the assessees could not apply for issue of lower or nil deduction of TDS/TCS in the Traces Portal for the F.Y. 2020-21, but were having the certificates for F.Y. 2019-20, such certificates will be applicable till 30.06.2020 of F.Y. 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 the procedure prescribed. Further, on payments to Non-residents (including foreign companies) having Permanent Establishment in India, where the above applications are pending, tax on payments made will be deducted at the subsidised rate of 10% including surcharge and cess, on such payments till 30.06.2020 of F.Y. 2020-21, or disposal of their applications, whichever is earlier (Order passed on 31.03.2020).

In case of pending applications for lower/nil rate of TDS/TCS for F.Y. 2019-20, the Assessing Officers have been directed to dispose-off the applications through a liberal procedure by 27.04.2020, so that the taxpayers may not have to pay extra tax which may cause liquidity issues to them (Order passed on 03.04.2020).

Both the above orders had created certain confusions and queries in the mind of the taxpayers. For example, the order of CBDT dated 31.03.2020 states that where the application is pending disposal as on date for FY 2020-21 but a similar certificate was issued in FY 2019-20, then the certificate for FY 2019-20 shall remain valid till 30.06.2020. 

The deductor and the nature of the transaction and the amount for which the certificate is issued shall continue to remain valid till 30.06.2020. 

However, there is no increase in the limit of the maximum amount (quantum limit) to which the lower rate will apply either proportionately or otherwise. If the amount is exhausted by March 2020 then the extension has no meaning and pending disposal of a fresh certificate for FY 2020-21, the tax will be deducted at the full rate.

This has now been clarified that the quantum amount for which the lower TDS/TCS certificate was issued in FY 2019-20 shall be reset to the same maximum amount on 01.04.2020 to which the lower or nil rate shall apply till 30.06.2020.

With a view to further mitigate the hardships to taxpayers, CBDT provides clarification on orders u/s 119 of the Income Tax Act, 1961 issued on 31.03.2020 and 03.04.2020, relating to issue of certificates for lower deduction/collection of TDS/TCS vide a clarification dated 09.04.2020.

It has been further clarified that in case new deductors or buyer is required to be included for the Lower or Nil TDS certificates then a new application shall be required to be made as per the procedure mentioned in the Annexure to Order dated 31.03.2020.

Similar is the case for requirement of reduction in lower rate of TDS/TCS in FY 2020-21 than the rates for which the certificates were issued for FY 2019-20, the order dated 09.04.2020 clarifies.

In an another communication dated 09.04.2020, CBDT has given the list of Commissioners to be contacted in case of any difficulty in Port Clearance Certificate u/s 172. Access the List here.




Read the full text of the clarification dated 09.04.2020.


F.No. 275/25/2020-IT(B) 

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

North Block, New Delhi 
09, April, 2020 

Sub: Clarification on orders dated 31.03.2020 and 03.04.2020 issued under section 119 of the Income-tax Act, 1961 (the Act) by CBDT vide F. No. 275/25/2020-IT(B) regarding issuance of certificate for lower rate/nil deduction/collection of TDS/TCS u/s 195, 197 and 206C(9) of the Income-tax Act. 1961-reg-

Representations have been received. seeking further clarifications on orders dated 31.03.2020 and 03.04.2020 issued under section 119 of the Act by CBDT vide F. No. 275/25/2020-IT(B) regarding issuance of certificate for lower rate/nil deduction/collection of TDS/TCS u/s 195, 197 and 206C(9) of the Act. The matter has been examined in the Board and following clarifications w.r.t. above are issued: 

(i) Issue of validity period of lower/nil deduction/collection certificates of F.Y. 2019-20:

For the purpose of Para 2 (a ) and 2 (b) of the order dated 31.03.2020. the lower/nil deduction/collection certificates will be valid for the particular period for which these were issued for F.Y. 2019-20 and also for further period from 01.04.2020 to 30.06.2020 for F.Y. 2020-21 subject to conditions as mentioned in the order dated 31.03.2020. For example, if a certificate was issued for a period from 01.10.2019 to 15.12.2019, the same shall be valid for F.Y. 2019-20 for the period from 01.10.2019 to 15.12.2019, and for F.Y. 2020-21 the same shall be valid from 01.04.2020 to 30.06.2020 subject to conditions as mentioned in the order dated 31.03.2020.

(ii) Issue of threshold/transaction limit for lower/nil deduction/collection certificates of F.Y. 2019-20:

For the purpose of Para 2 (a) and 2 (b) of the order dated 31.03.2020, threshold/transaction limit mentioned in lower/nil deduction/collection certificate issued for F.Y. 2019-20 will be taken fresh for period from 01.04.2020 to 30.06.2020 for F.Y. 2020-21 and the amount of threshold limit will be the same as was assigned for these certificates for F.Y. 2019-20 subject to other conditions mentioned in the order dated 31.03.2010.

(iii) Issue of approval and communication of lower/nil deduction/collection certificates:

Official emails or other electronic communication may be used by field authorities of Income Tax Department for internal approval for issue of lower/nil deduction/collection certificates and for communication of the same.

(iv) 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:

In case the payee or buyer/licensee/lessee taxpayer had a certificate for 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 31.03.2020 shall not apply to such cases and they have to apply afresh as per procedure, mentioned in annexure of the above mentioned order. Similarly. if the rates of TDS/TCS mentioned in old certificates are higher and the taxpayer wants revision of the rates in view of impact of Covid-19 outbreak on its business, the relaxation as provided in Para 2(a) and 2(b) of the order dated 31.03.2020 shall not apply to such cases and they will have to follow the procedure mentioned in the annexure of the above mentioned order and apply afresh.

This issues with the approval of Member (IT&R), CBDT. 

(Mahesh Kumar) 
Director (IT-Budget), CBDT 

Download Copy of Clarification dated 09.04.2020 in pdf format.


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