Surcharge on TDS

[gvenugopal g]

Dear Experts,

Please refer CBDT Circular No.8/2020 dated 13th April 2020 regarding enhenced surcharge on TDS/TCS.

In the financial year 2019-20 we didn't deduct surcharge for the payments exceeds ₹ 50 Lakh Kindly explain and clarify whether shortfall(surcharge @15%, 25% or 37%) will be be paid with interest if even three Qly TDS returns (APR' - DEC'19) filed within due dates?

Thanks & regards: G Venugopal

[DR.MARIAPPAN GOVINDARAJAN]

The circular clearly indicates that such transaction has been completed and entire payment has been made to the deductee/payee on or before 5th July, 2019 and there is no subsequent transaction between the deductor/collector and the deductee/payee in the financial year 2019-20 from which the shortfall of tax could have been deducted/collected by the deductor/collector the assessee will not be considered as assessee-in-default. However the shortfall is to be recovered.

For the II quarter and III quarter you are required to pay the shortfall along with interest.

[gvenugopal g]

Dear Sir,

Thank you very much for your valued explanation.

The enhenced surcharge rates (10,15,25 & 37 percent) are applicable to all payments exceeding ₹ 50 Lakh to deductee/payee (individual/Huf / firm/ aop/ company)?

My doubt is the above surcharg rates are applicable to Individual/HUF for computing tax for the FY 2019-20. So the recent Circular No.8 is applicable to payments above ₹ 50 lakh to deductee/payee whose status is residential individual/huf?

I would be appreciated if you could brief the above views.

AI Summary

Enhanced surcharge on TDS may require recovery of shortfall with interest where surcharge was not deducted on large payments. Where the entire payment was made to the deductee/payee on or before 5 July 2019 and there was no subsequent transaction in the financial year from which the shortfall could have been deducted, the payer will not be an assessee in default, although the surcharge shortfall is recoverable; for the second and third quarters the payer must pay the shortfall together with interest. Practitioners queried whether enhanced surcharge rates apply to residential individuals and HUFs for computing tax in 2019 20.