CBDT clarifies regarding short deduction of TDS or TCS due to increase in rates of surcharge

Apr 15, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Central Board of Direct Taxes (CBDT) on April 13, 2020 clarifies regarding short deduction of TDS or TCS due to increase in rates of surcharge by Finance (No. 2) Act, 2019.

Whereas, the Finance (No. 2) Act, 2019 increases the rate of surcharge which will be applicable from April 01, 2019 for previous year 2019-20 relevant to assessment year 2020-21. The rates are as under:

S. No.

Income slab

Surcharge before the Act

Enhanced surcharge as provided by the Act


Less than 50 lakh rupees




50 lakh rupees but less than 1 crore rupees




1 crore rupees but less than 2 crore rupees




2 crore rupees but less than 5 crore rupees




5 crore rupees and above




And Whereas, several cases have come to the notice of CBDT that, deductors or collectors were held to be assessee in default for short deduction of Tax Deducted at Source (TDS) or short collection of Tax Collected at Source (TCS) in case where final transaction was done before laying of the Finance (No. 2) Bill, 2019 (i.e. July 05, 2019).

Therefore, CBDT clarifies that a person responsible for deduction or collection of tax will not be considered to be an assessee in default in respect of transactions where:

a)       Such transaction including subsequent transaction has been completed and entire payment has been made to the deductee or payee on or before July 05, 2019.

b)      TDS or TCS has been deducted and collected on such sum as per the rates in force prior to the enactment of the Act.

c)       Tax deducted or collected has been deposited in the account of Central Government on or before the due date of depositing the same.

d)      TDS or TCS statement has been furnished by such person before the due date of filing of the said statement.

However, if the person fails to fulfill any of the above mentioned conditions will not be eligible for benefit provided under this circular. Further, if the deductor or collected shortfall of tax after July 05, 2019 from the transaction(s) made subsequently after the said date, interest, if any, for delay in deduction or collection of such tax will not be levied.

The relaxation does not absolve the deuctee or payee to pay tax including enhanced surcharge by advance tax or self-assessment tax and file return of income after paying such tax.

[Circular No. 8/2020]


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