New Delhi:In the lockdown period, the government has spared even the super rich from being categorised as a defaulter for not paying advance taxes on the basis of higher surcharge made applicable for 2019-20.
In the July 5 Budget, Finance Minister Nirmala Sitharaman had raised the surcharge levied on top of the applicable income tax rate from 15% to 25% for those with taxable incomes between Rs 2 crore and Rs 5 crore, and to 37% for those earning more than Rs 5 crore. The increased rates were made applicable from April 1, 2019 for FY20.
In a clarification, CBDT has now said that if advance tax or TDS (deducted by the employer on behalf of the super rich employee) was paid prior to July 5 (when enhanced surcharge was announced), the lower deduction of tax based on applicable surcharge rate in the earlier period would not be ground to declare a "taxpayer in default" that would result in payment of interest and penalty for the period of the delay.
Such relaxation would be available if the entire advance tax or TDS for the period prior to July 5 has been completed and there is no subsequent transaction in the financial year 2019-20 from which the shortfall of tax could have been collected. The relaxation can also be claimed on the basis of timely payment and furnishing of TDS and advance certificate.
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