CBDTs clarification on short deduction of TDS due to increase in surcharge rates

SAGAR MALHOTRA | Last updated: 29 April 2020

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This article clarifies the Central Board of Direct Taxes' (CBDT) stance on short deductions of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) following increased surcharge rates introduced by the Finance (No.2) Act, 2019. It explains that deductors or collectors won't be considered in default if transactions were finalised and payments made before July 5th, 2019, with TDS/TCS deducted at old rates and deposited on time. The article outlines specific conditions that must be met to avoid penalties.

Clarification issued by CBDT in relation to short deduction of TDS/TCS due to increase in rates of surcharge by Finance (No.2) Act, 2019 By way of this writing, I would like to discuss the recent clarification issued by CBDT dated 13th April, 2020 in relation to the deduction/collection of TDS/TC

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FAQ :

The CBDT clarification addresses short deductions of TDS/TCS due to increased surcharge rates introduced by the Finance (No.2) Act, 2019.

The new surcharge rates were made applicable from April 1st, 2019.

A deductor/collector will not be in default if the transaction was finalised and payment made on or before July 5th, 2019, TDS/TCS was deducted at old rates, deposited on time, and returns were filed by the due date.

If any of the specified conditions are not met, the person will not be eligible for any benefits related to short deduction or collection.

If a shortfall is recovered on or after July 5th, 2019, interest for the delay in deduction or collection will not be levied, but interest on delayed payment after deduction/collection may still apply.