The Central Board of Direct Taxes issued a clarification on 20 July, 2020 stating that the three notifications issued by the Central Government in connection with its powers to exempt persons or class of persons from being subjected to Tax Deduction at Source (TDS) under section 194N (v) of the Income Tax Act, 1961 as inserted by the Finance Act, 2019 will be valid.
Central Government upon consultation with the RBI, issued three notifications exempting Cash Replenishment Agencies (CRAs) Commission agent or trader operating and Authorised dealer and its franchise agent and sub-agent and Full Fledged Money Changer (FFMC) licensed by the RBI.
Section 194N of the Income Tax Act, 1961 was subsequently amended by the Finance Act, 2020 in order to facilitate stringency towards non ITR filers. This resulted in ambiguity regarding the validity of the notifications already issued. The Board vide a Circular dated 20 th July, 2020 thus clarifies that the clause (v) of the proviso to section 194N as it stood prior to the amendment of 2020 is now clause (iv) to the said section and thus the three notifications are deemed to be issued under clause (iv) of section 194N as
amended by Finance Act, 2020 and are subject to the conditions contained therein.
Click here to read the clarification.
