1 April 2020
COVID-19 IMPACT: Income Tax - Relief to lower/nil deduction certificates, extends validity till 30 June
 
The Covid-19 pandemic is widely spreading across the globe and has resulted in a lot of hardship for everyone. While Finance Minister, Nirmala Sitharaman announced certain relief measures on 24 March 2020 regarding various tax and regulatory provisions, one of the important aspects which was missing was the extension of relief in respect of lower/Nil deduction certificates. The Central Board of Direct Tax (CBDT) has now announced relief measures with respect to lower/NIL TDS/TCS certificates obtained by taxpayers. Considering the disruptions in normal working, the field officer is unable to dispose off the applications for NIL/lower TDS/TCS applications, accordingly, CBDT has issued the following directions for lower/Nil deduction certificates:
 
Sr. No. Situation Relaxation
1. Taxpayer had obtained lower/NIL TDS/TCS certificate for Financial Year (FY) 2019-20 and have made an online application on TRACES portal for FY 2020-21, which is pending for disposal 
 
Validity of certificates obtained for FY 2019-20 extended till 30 June 2020 or up to disposal of applications for FY 2020-21, whichever is earlier. 
2. Taxpayer had obtained lower/NIL TDS/TCS certificate for FY 2019-20 but could not apply for FY 2020-21 
 
Validity of certificates obtained for FY 2019-20 extended till 30 June 2020. However, taxpayer needs to make an application for FY 2020-21 at the earliest giving details of the transactions as per the procedure prescribed in the notification as soon as normalcy is restored or 30 June whichever is earlier
3. Taxpayer who have not obtained certificate for FY 2019-20 
 

 
Taxpayer can apply as per procedure prescribed in the notification vide email. The notification also provides mechanism for handling by the tax officer of such application vide email (where tax officer is directed to issue certificate update 30 June 2020 over e-mail)
4. Payments to Non-residents (including foreign companies) having Permanent Establishment (PE) in India and not covered situation 1 and 2 above Applicability of tax rate of 10% (inclusive of surcharge and cess) on such payments till 30 June 2020 or disposal of their applications by the Assessing Officers, whichever is earlier.
Our Comments
This is a welcome relief for the taxpayers as there was huge difficulty to manually file the details and also availability of tax officers in these difficult times was a challenge. 
 
However, as we are aware, the applications filed in earlier years would have specific amounts allocated to each party for withholding tax. Now with this extension of certificates it would be interesting to see how gross amounts on the certificates would be adjusted against the existing certificates on online portal as the originally available limit could have been exhausted in FY 2019-20 itself. We hope that reasonable proportionate limits are offered for the next three months.
 
Also, in our view, similar relaxation should be granted to 100% DIT relief certificate obtained by Shipping companies, as the shipping industry is facing a similar issue on obtaining DIT/PCC from the field officer.
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