The Central Board of direct Taxes (CBDT) vide a circular dated 13th April 2020 clarifies the conditions where short deduction of TDS/TCS during increase in rates of surcharge shall not be considered as default in tax payment. Surcharge is a tax on tax which is levied on the tax payable, and not on the income generated. The Finance (No.2) Act, 20l9 has proposed an increase in the surcharge applicable to individuals in select high income groups. These mew rates are applicable from the 1st April 2019. Thus, every person as was required to compute his tax liability after taking into account the enhanced rates of surcharge as bellow-
|Income slab||Surcharge before the Act||Increased surcharge provided by the Act|
|Less than 50 lakh rupees||Nil||Nil|
|50 lakh rupees but less than 1 crore rupees||10%||10%|
|1 crore rupees but less than 2 crore rupees||15%||15%|
|2 crore rupees but less than 5 crore rupees||15%||25%|
|5 crore rupees and above||15%||37%|
But the Central Government has noticed several cases wherein deductors / collectors were considered as defaulters for short deduction of TDS/TCSs in cases where final transaction was done before laying of the Finance (No.2) Bill, 2019 in the Parliament, i.e. 51h July 2019. Since the transaction was completed before the rates of enhanced surcharge were announced, the Central Government requested that such deductor or collector should not be held to be an assessee in default. Thus, CBDT clarified that in the following conditions a person responsible for deduction/collection of tax shall not be considered as an assessee in default-
- Transaction has been completed and entire payment has been made to the deductee/payee on or before 5th July, 2019.
- TDS has been deducted or TCS has been collected by such deductor/collector on such sum as per the rates in force as per the provisions prior to the enactment of the Act.
- Such tax deducted or collected has been deposited in the account of Central Government by the deductor/collector on or before the due date.
- TDS/TCS statement has been furnished by such person on before the due date of