Introduction
Income Tax Act (hereinafter referred as ‘The Act’) has provided several provisions for deduction/ collection of tax at source. Rates at which Tax is supposed to be deducted are provided in Section 192, 193, 194 and 195 (for non-residents). Person making the payment is responsible for deducting of taxes before making the payment.
However, there are certain cases where this might create genuine hardship for the taxpayers. These can be as follows:
- Taxpayer is incurring losses.
- Taxpayer is eligible for claiming certain deductions.
- Taxpayer has enough carried forward losses.
Undoubtedly taxpayer can claim refund of the TDS/TCS amount but it is unnecessary blockage of funds.
Therefore, so as to remove unjust hardship for taxpayers, government provided Section 197 of The Act, wherein the taxpayer can obtain a Certificate for lower from Assessing Officer.
Eligibility
Section 197 covers following sections of tax deduction only:
- Section 192 – Salary income
- Section 193 – Interest on securities
- Section 194 – Dividends
- Section 194A – Interest other than interest on securities
- Section 194C – Contractors income
- Section 194D – Insurance commission
- Section 194G – Commission/remuneration/prize on lottery tickets
- Section 194H – Commission or brokerage
- Section 194I – Rent
- Section 194J – Fee for Professional or technical services
- Section 194LA – Compensation on acquisition of immovable property
- Section 194LBB – Income in respect of units of investment fund
- Section 194LBC – Income in respect of investment in securitization trust
- Section 195 – Income of non residents
Time limit
There is no such fixed time limit so as to obtain certificate for lower tax deduction, however, as TDS is an on-going activity, it is always advisable to obtain such certificate at the beginning of the financial year.
How to obtain such certificate?
A set of documents along with the application is to be made in Form 13 with the respective assessing officer. As of now, only regions of Karnataka, Mumbai and Tamil Nadu have enabled electronic filing of Form 13. Following documents are required to be submitted:
- 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 received with the relevant documents by the jurisdictional assessing officer, he shall either call for more information and upon his satisfaction shall issue the certificate of lower deduction.
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