Now, the department has said that threshold would be taken afresh for the financial year 2020-21 (FY21) even if the validity of past certificates has been extended by three months.
Explaining the issue, Amit Maheshwari, partner, AKM Global, said the companies that think their TDS
or TCS would be more than their total tax liability opt for deducting tax at lower rates to avoid the process of refunds later and smoothen their cash flow.
For this purpose, they have to disclose their income and profits for the year to the department. The department then issues certificates to the entities from which they purchase goods or sell services to deduct lower TDS
or TCS. Now that amount will be calculated again from FY21 even as the validity of past certificates has been extended by three months.
Had there been no change to the old amount, there was fear that it would have been exhausted soon in FY21.
has clarified certain situations where there were issues regarding extension of validity of 2019-20 certificates for FY21. The deduction limits would be applied afresh for FY21,” said Amit Maheshwari, partner, AKM Global.
The board also clarified that even if the certificates were issued for part of FY20, these will be valid till June 30.