What is the Lower Deduction Certificate?
Section 197 of the Income Tax Act provides that if a taxpayer considers that his total income requires deduction of income tax at a lower / nil rate, he may apply to the Assessing Officer (AO) requesting for a lower withholding certificate in Form 13.
The AO, if satisfied that the existing and estimated tax liability of an applicant justifies the deduction of tax at a lower rate or no deduction of tax, as the case may be, shall issue a certificate in accordance with the provisions of sub-section (1) of Section 197 for deduction of tax at such lower rate or no deduction of tax.
When Lower Deduction Certificate can be obtained
A Certificate of Lower Deduction can be obtained if TDS is deductible under any of the following sections:
- Section 192 — Salaries
- Section 193 — Interest on securities
- Section 194 — Dividends
- Section 194A — Interest other than interest on securities
- Section 194C — Contractor payments
- Section 194D — Insurance commission
- Section 194G — Commission on sale of lottery tickets
- Section 194H — Commission or brokerage
- Section 194-I — Rent
- Section 194J — Fees for professional / technical services
- Section 194K — Income from units
- Section 194LA — Compensation on acquisition of immovable property
- Section 194LBB — Income from units of an investment fund
- Section 194LBC — Income from investment in securitisation trust
- Section 194M — Payment to contractors / professionals by individuals / HUFs
- Section 195 — Payments to non-residents
How the certificate is issued
The CBDT, vide Notification No. 8/2018 dated 31st December 2018, has provided the procedure for electronic filing of Form 13 online and generation of the certificate through TRACES.
The certificate shall be valid for such period of the previous year as may be specified in the certificate.
Our team will assist in obtaining a Lower Deduction Certificate for both Residents as well as Non-Residents.
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