Simplified e-procedure for Nil and lower TDS certificates w.e.f October 1 2023

If you are eligible for lower or NIL TDS (Tax Deducted at Source) under Income Tax Act, filing for the certificate will be much easier as the Income Tax Department has finalised the e-procedure for the process. The new mechanism has come into effect from October 1' 2023.

Form to be Filed for Certificate

An assessee must complete Form 13 to get a NIL or lower TDS certificate under section 197. Such a certificate is issued if the assessee’s estimated tax liability justifies no deduction tax or deduction of tax at a lower rate. The certificate can be obtained concerning incomes such as Salaries, Interest on Securities, Dividend, Interest other than interest on securities, rent, fees for professionals or technical services, payment of compensation on compulsory acquisition of immovable property, among others.

E-Procedure for filing form 13

According to a notification by the Directorate of Income-tax (Systems), first, one will need to register with PAN (Permanent Account Number) at TRACES (www.tdscpc.gov.in) website. After login, one can submit Form 13 and Annexure with supporting documents using either Digital Signature, Electronic Verification Code, Aadhar-based Authentication, or Mobile OTP. NRIs can submit the form with the help of a digital signature only.

Steps for Registration on TRACES

• Visit the site https://contents.tdscpc.gov.in/;
• Click on Login and select Register as New User option
• Select ‘Taxpayer’ from the drop-down list
• After selecting Proceed, the registration form would be displayed
• Fill in the appropriate information and submit and the registration in TRACES would be done.

Steps for filing Form 13 post registration on TRACES

• Login in TRACES and under ‘My Profile Tab’, register DSC of the authorized person
• Under ‘Statements / Form’ tab select ‘Request for Form 13'.
• Form 13 would be displayed and the following appropriate details need to be filled up by the applicant
• Basic details of the Company and authorized person registered on TRACES portal (The same shall be auto-populated)
• Details of existing liability under Income-Tax Act
• TAN wise details of estimated income/amount to be received from parties during the subject year (for e.g. FY 2019-20) along with relevant section of TDS (e.g. Section 194C, Section 194J etc.)
• Requested rate of TDS proposed by the taxpayer in respect of the estimated income
• Details of projected income of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19)
• Details of estimated tax computation of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19).
• Further, supporting documents are required to be uploaded which include:
• Final Assessment orders for last 4 assessment years
• Details/workings for estimated income and tax computation (self attested by authorized person) 
• Audited Financial Statements of last 3 years
• Projected Balance Sheet & P/L income of the subject year (for e.g. FY 2019-20) and immediately preceding financial year (FY 2018-19) (self attested by authorized person).
• Acknowledged copy(s) of TDS returns filed for last 2 financial years.
• Once all the details are filled up and appropriate documents are uploaded, the applicant is required to submit the Form 13.

Authorised Jurisdictions

• For applications filed in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad and Pune, cases where revenue forgone exceeds a sum of ₹50 Lakh, the applications shall be assigned to the DCIT/ ACIT exercising jurisdiction over TDS matters, and in other cases, the applications shall be assigned to the jurisdictional ITO.
• For applications filed in remaining cities/towns/jurisdictions, the application where revenue foregone exceeds a sum of ₹10 Lakh, application shall be assigned to the DCIT/ ACIT exercising jurisdiction over TDS matters, and in other cases,
• the applications shall be assigned to the ITO exercising jurisdiction over TDS matters.

The officer will determine existing and estimated liability based on parameters such as tax payable on the estimated income of the previous, tax payable of the last three years, existing liability and advance tax payment. Also, the assessees should fill in the condition of filing income tax returns during the last four previous years. Based on all these, AO can decide whether to issue the certificate or not. Certificates will be issued for a certain period.

Certificate Issued to whom

The certificate for lower or NIL deduction of tax will be issued directly to the person responsible for deducting the tax, with advice to the person who applied for the issue of such certificate. However, if suppose the number of persons responsible for deducting the tax is likely to exceed 100, and the details of such persons are not available to the person making such an application. In that case, the certificate may be issued to the applicant, authorising him to receive income after deduction of tax at a lower rate.

Time Limit for issue of Certificate

According to the Income Tax Department, it is mandatory for the Assessing Officer to dispose of the applications u/s 197 within 30 days from the end of the month in which the application complete in ALL respects is received. Section 197 strikes a delicate balance between ensuring cash flow to the taxpayer and releasing government dues at the earliest. Taxpayers are, therefore, advised to file complete details required for processing the application in the first instance itself. This will expedite the issuance of certificate u/s 197, the department advised.