Alert for taxpayers seeking revision of lower withholding tax
According to a report in news agency IANS, businesses seeking lower TDS/TCS (tax deduction at source /tax collected at source) for FY21 in view of the impact of Covid-19 outbreak on business will have to apply afresh with the income tax department and wait for its order. Such application for lower withholding tax rate will not get extension of any previous order (for FY20) for a period of three months till June 30, 2020, the report added.
According to a report in news agency IANS, businesses seeking lower TDS/TCS (tax deduction at source /tax collected at source) for FY21 in view of the impact of Covid-19 outbreak on business will have to apply afresh with the income tax department and wait for its order. Such application for lower withholding tax rate will not get extension of any previous order (for FY20) for a period of three months till June 30, 2020, the report added.
On March 31, Central Board of Direct Taxes (CBDT) allowed taxpayers who had filed for lower TDS/TCS for FY21 and whose application was pending for disposal as on date to extend the period of their FY20 order on lower TDS by three months to June 30, 2020. Such extension was given even if taxpayer did not file application for current fiscal but had orders for lower tax for the previous year.
In a clarification, CBDT has said that if an application for FY21 is seeking lower TDS/TCS than what was accorded in FY20, then the relaxation provided in March 31 order will not apply and such applicant will follow due procedure and apply afresh.
Extension will also not be given to the payee or buyer taxpayer who has made application for FY21 mentioning a new or different TAN.
TAN stands for Tax Deduction and Collection Account Number. It is a ten digit alphanumeric number thats allotted to those who are supposed to deduct tax at source or TDS.
It has also been clarified by CBDT that extension of lower TDS/TCS is a mitigation exercise against hardships of payees caused due to Covid-19 related disruptions. So, this extension will only be available during April-June period.
The CBDT order is expected to allow seamless flow of payments to contractors and service providers, both residents and non-residents, as continuity of tax treatment will flow for another three months.
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