Apply online Nil/Lower TDS Deduction Certificate-Form 13
Apply Lower or Nil TDS Deduction certificate online Form 13
TDS Deduction – Form 13 Online – Lower or No TDS Deduction
- The income tax provisions relating to lower or nil TDS deduction imply that where TDS is required to be deducted but the recipient’s income qualifies the assessing officer for a lower or nil TDS deduction, the assessing officer will issue a certificate for lower or nil TDS deduction on an application made in this regard.
- The deductor would either deduct TDS at a reduced rate or not deduct TDS at all based on the certificate. Form 13 is used to make a request for a lesser or no TDS deduction.
- The CBDT has provided the mechanism for electronic filing of FORM 13 online and generation of the certificate using TRACES in notification no. 8/2018 dated December 31, 2018.
- The person in charge of making the payment is tasked with deducting tax at defined rates either at the time of credit in the books or at the time of payment to the recipient, whichever comes first, and only paying the balance to the recipient.
- This ensures that taxes are collected in advance, prevents tax avoidance, and aids in the future tracking of recipients’ income. However, the deduction of tax at source may cause difficulty for a small number of taxpayers who may not have any taxable income at all.
- Taxpayer has incurred a loss for the current year;
- Taxpayer has carried forward losses from previous years that can be set off in the current year;
- Taxpayer is eligible to claim certain exemptions or deductions during the year; The foregoing could result in the taxpayer having no taxable income at all for the year.
Income Covered In accordance with Section 197,
The recipient of income can file a Section 197 application in the following categories of receipts where TDS is needed under the following sections:
- Under Section 192 – Salary income
- Section 193 – Interest on securities
- Under Section 194 – Dividends
- Section 194A – Interest other than interest on securities
- Under Section 194C – Contractors income
- Section 194D – Insurance commission
- Under Section 194G – Commission/remuneration/prize on lottery tickets
- Section 194H – Commission or brokerage
- Under Section 194-I – Rent
- Section 194J – Fee for Professional or technical services
- Under Section 194LA – Compensation on acquisition of immovable property
- Section 194LBB – Income in respect of units of investment fund
- Under Section 194LBC – Income in respect of investment in securitization trust
- Section 195 – Income of non residents
The application in Form 13 cannot be made if the payment is due to be deducted under any other part of the Income Tax Act.
The Reduced/Nil TDS Certificate will only be issued if the Income Tax Officer is satisfied that the taxpayer’s income warrants a lower TDS deduction.”
- Eligibility for Filing a Section 197 Application
Where any person’s income is subject to TDS under the above-mentioned sections, and the recipient’s income supports non-deduction or a smaller deduction of income tax based on his estimated final tax due, an application can be submitted.
Timeframe for making an Application
There is no deadline for filing an application under Section 197 of the Internal Revenue Code. However, because TDS is deducted on income earned during the current fiscal year, it is advised to file an application at the start of the fiscal year for monthly income and as and when the need arises for one-time incomes.
Also read : Implication of cash transaction under income tax Act
Procedure for Filing a Section 197 Application
- To obtain authorization, an application for nil/lower TDS deduction utilizing the FORM 13 must be filed with the Assessing Officer (TDS). Form 13 can be submitted either electronically or manually. Delhi, Uttar Pradesh, and Haryana Punjab have permitted online filing of Form 13 to speed up the processing of applications for certificates of lower/nil tax deducted at source under Section 197(1) of the Income Tax Act 1961.
- Suggested that tax payers submit complete and accurate information needed to process the application in the first place.
- If the application meets the AO’s requirements, he will issue the certificate;
- A copy of this certificate can be included to the deductor’s invoice, which he can use to substantiate the lesser tax deduction.
Online Filing & Generation of Form 13
For taxpayers in Delhi, an online application can be made by logging in to TRACES or by registering here. This page contains step-by-step instructions as well as screenshots.
- You must register for the TRACES portal. As a result, if the taxpayer is not registered in TRACES, he or she must first register in TRACES. Please follow the instructions below to register for TRACES:
-
- Visit https://contents.tdscpc.gov.in/ for further information.
- Click Login and select Register as New User;
- Select ‘Taxpayer’ from the drop-down list;
- Select Proceed the registration form will appear;
- Fill in the required information and submit; and
- Your registration in TRACES will be completed.
-
- Log in to TRACES and select ‘Request for Form 13′ from the ‘Statements / Forms’ menu.
- The applicant must fill out Form 13 and upload the applicable papers; and
- Once all of the details have been filled out and the appropriate documents have been submitted, the applicant must submit the form 13 using either Digital Signature or EVC.
Generation of Certificate
- After the applicant has successfully submitted an application in FORM 13 through TRACES, the application will be routed to the relevant TDS assessing officer based on the information/details provided in FORM 1.
- The Assessing Officer would generate the certificate after conducting adequate verification of the information/details provided in FORM 13 and receiving approval from the authorized authority.
- There will be no need for a signature as the certificate will be generated by the computer. Through their TRACES login, both the applicant and the deductor can get the resulting certificate.
Documents to Submit with Form 13
- Signed Form 13
- Copies of return of income along with enclosures and acknowledgment for previous 3 financial years
- Copies of assessment orders for previous 3 financial years
- In case of assessee having business or profession income, copies of financial statement along with audit report if any for previous 3 financial years
- Projected profit and loss account for the current financial year
- Computation of income statement for previous 3 financial years and estimated computation for the current financial year
- Copy of PAN card
- Tax Deduction Account Number of all parties responsible for paying you
- E-TDS return acknowledgment for previous 2 financial years
- Estimated income during financial year
- Any other documents depending on nature of income
- TDS default earlier
Once the application is presented to the jurisdictional assessing officer (TDS) and is complete in all areas, it must be disposed of within 30 days of the end of the month in which it was received. Before granting the certificate or rejecting the application, the Assessing Officer will analyze the documents/information presented and may ask for more clarifications and documents.
In the case of non-resident Indians selling property in India, a lower TDS Deduction certificate is required.
Section 195 applies when a resident makes a payment to a non-resident for the purchase of real estate in India. TDS is applied to the sale price of such property at a rate of 20% plus surcharge and Cess, which the property buyer is obligated to subtract from the selling price due to the buyer. If the seller submits an application to the Income Tax Officer for a lower TDS deduction certificate together with the following documents:
- Purchaser’s agreement to sell
- The Buyers’ TAN Numbers
- Capital gain computation
- Assisting with the property’s cost
- Affidavit that the non-resident seller’s income was below the taxable limit for the previous three years
- Proof of being a non-resident for the previous three years (Passport Immigration stamping)
When joint owners sell property, two separate applications must be filed, and the department has an internal guideline that the application must be processed within 30 days. Internally, the officer processes the application and sends it to the Additional or Joint Commissioners for approval; if the rate of deduction is less than 3%, the commissioner must approve it.
The department will not consider any intended investment by the seller out of the selling consideration that is eligible for a deduction from taxable capital gains because evidence for it cannot be supplied at the time of application.
It is advantageous to obtain a TEC for NRIs whose real tax burden is less than the rate of tax stipulated by the Act. A few scenarios where the NRI should apply for TEC are listed below:
Situations | Prescribed rate of TDS (%)* | Actual Tax Liability (%)* |
Rental income | 30% | NIL / Lower than rate applicable |
Short Term/Long Term Caption Gain on sale of property and intention for claiming exemption by re-investment in property/bonds | 20%/30% | NIL / Lower than rate applicable |
Short Term/Long Term Capital Gains on sale of securities/and other transactions | 15%/30% | NIL / Lower than rate applicable |
Interest Income on NRO Deposits up to basic exemption limit – Rs.2,50,000 for AY 2019 | 30% | NIL Rate |
*Plus relevant surcharge and Health and Education Cess
- Tax authorities have made it easier for Indian taxpayers to find out whether or not they are due a refund. To determine if you are due a refund, go to the NSDL-TIN website, www.tin-nsdl.com, and select Status of Tax Refunds.
Validity of an Application Made Under Section 197
- Section 197 is valid from the date of issue and throughout the financial year until it is cancelled by the assessing officer (TDS) before the end of the financial year.https://carajput.com/learn/lower-tds-certificate-for-nri-property-sales.html
**********************************************************
If this article has helped you in any way, i would appreciate if you could share/like it or leave a comment. Thank you for visiting my blog.
Legal Disclaimer:
The information / articles & any relies to the comments on this blog are provided purely for informational and educational purposes only & are purely based on my understanding / knowledge. They do noy constitute legal advice or legal opinions. The information / articles and any replies to the comments are intended but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as a legal advice or an indication of future results. Therefore, i can not take any responsibility for the results or consequences of any attempt to use or adopt any of the information presented on this blog. You are advised not to act or rely on any information / articles contained without first seeking the advice of a practicing professional.