Are you puzzled with due date of Q1 TDS statement of Financial Year 2020-21.

 

The Govt. vide the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 read with Notification No. 35 /2020, dated 24-06-2020 has extended various due dates of Income-tax compliances. It includes the extension of due dates for filing of Income-tax Returns for the Assessment Year 2019-20 and 2020-21, TDS/TCS statement of the 4th quarter of Financial Year 2019-20, etc.

The Notification has specifically provided that the due dates for completing any compliance shall be 31-03-2021 if it falls during the period from 20-03-2020 to 31-12-2020 except those specified in the Proviso to Notification No. 35/2020. Clause (iii) to the said Proviso creates an exception that the TDS/TCS statement for the month of February or March, 2020, or for the quarter ending on the 31st day of March, 2020, as the case may be, the due date shall be extended to the 31st day of July, 2020. The Notification did not mention anything about the due date for filing of TDS/TCS Statement for Q1 and Q2 of the financial year 2020-21. As the prescribed due date for furnishing of TDS statement for the Quarter 1 of the Financial Year 2020-21 is around the corner, that is, July 31, 2020, there is a chaos to know about the applicable due date. Whether it will be the original due date of 31-07-2020 as per Rule 31A or 31-03-2021, the due date extended for all compliances (falling between 20-03-2020 to 31-12-2020) by the Notification No. 35/2020, dated 24-06-2020.

Bases literal interpretation  of the Notification, it is reasonable to conclude that the due dates of all compliances falling between 20-03-2020 to 31-12-2020 have been extended to 31-03-2021. This extension is not available for all those compliances which are mentioned in the Proviso to the said notification. In the absence of reference of the due date for filing of TDS statement for Q1 of FY 2020-21, it could be concluded that the due

date should be 31-03-2021. However, the purposive interpretation suggests otherwise. The due date for filing of TDS Statement for Q1 and Q2 falls beyond the due date for filing of TDS Statement of Q3. If the literal interpretation of the Notification is applied the deductor gets time till 31-03-2021 to furnish TDS statements for Q1 and Q2 but for Q3 he is required to furnish the statement by 31-01-2021 as this due date is not falling between the stated duration of 20-03-2020 to 31-12-2020. This will create an unyielding situation for the tax deductors as they have to prepare and submit TDS statement of Q3 much before the due date of furnishing TDS statements of Q1 and Q2 of Financial Year 2020-21.

Further, in the absence of any announcement of a change in the TDS utility, the CPC may automatically charge the late filing fees of Rs. 200 per day if TDS statement is not filed on or before 31-07-2020.

Thus, it is advisable that the deductors should follow the original prescribed limitation period as far as the due dates for filing of TDS/TCS Statement for Q1 and Q2 of FY 2020-21 are concerned.

It should be noted that the Notification no. 35 did not provide any relaxation with respect to the payment of tax. In absence of any relaxation of payment of tax, no concessional interest rate shall be available to a taxpayer for making delayed payment of TDS, TCS or Advance-tax. The taxpayer is required to deposit tax with the Central Government on respective due dates to avoid any interest charges. This also supports the conclusion that there is no extension in the due date.

The last reasoning to support this conclusion is the due date for issuing the TDS/TCS Certificate. Rule 31 provides that the TDS Certificate is required to be issued by the deductor on a quarterly basis within 15 days from the due date of furnishing the statement of TDS. If literal interpretation is believed, the deductor will be required to issue the certificate by 15-04-2021 for Q1 and Q2 and by 15-02-2021 for Q3. This will create a situation of havoc for the deductees as they will not get any confirmation about the deposit of tax deducted by the deductor.

One of the well-recognised canons of construction is that a law has to be read as it is written in the document. Thus, a literal interpretation of Notification No. 35 read with the Ordinance suggest that the due date for furnishing of TDS statement for Q1 and Q2 of Financial Year 2020-21 stands extended to 31-03-2021. It is recommended that the CBDT should issue a clarification to rest the controversy.