In a major development, CBDT has issued a circular clarifying the process of exercising of option by a taxpayer with regard to deduction of tax at source (TDS). Income Tax dept through its official Twitter handle said, “CBDT issues Circular C1 of 2020 dated 13.04.2020 clarifying the process of exercising of option by a taxpayer with regard to deduction of tax at source if he/she opts for the concessional rates of tax as per section 115BAC of IT Act,1961.”
Adding another tweet, Income Tax dept said, “Employee to intimate employer of intention to opt for new concessional rates.Intimation so given will be applicable for the year &can’t be modified.However,employee will continue to have the right to exercise such option or continue with earlier scheme at time of filing ITR.”
In the budget 2020-21, Finance Minister Nirmala Sitharaman gave option to taxpayers to pay lower rate of tax if they were willing to forego all deductions. Under this lower rates, different income slabs were fixed for income tax rate staring from 10 per cent and rising to 25 per cent. While giving this option, she retained old tax slabs rates ranging from 5 to 30 per cent with surcharges at higher income bracket. But in this system, the taxpayer get benefit of exemptions.
Earlier, the government had extended the validity of all lower withholding tax orders secured by assessees by three months till June 30 to mitigate the hardships of payees caused due to Covid-19 related disruptions.
The Central Board of Direct Taxes (CBDT) in an order had allowed taxpayers who have filed for lower TDS/TCS (tax deduction at source/tax collected at source) for FY 21 and whose application is pending for disposal as on date to extend the period of their FY20 order on lower TDS by three months to June 30, 2020.
The extension will also be given if taxpayers have the lower TDS order for FY20 but have so far not applied similar order for FY21. However, taxpayers need to apply at the earliest giving details of the transactions and the Deductor/Collector to the TDS/TCS Assessing Officer as per procedure prescribed.