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As we all know there are different Tax deductions/Evasion rates and measure devised Income Tax Provisions. They Provide deduction and collection of Tax at Source. Based on the section category of section it falls, Tax rates for such deduction are provided under Section 192, Section 194 and 195(non-residents). The Payer should be deducted with the tax at the time of credit or payment to the recipient, whichever is earlier, and only pay the balance amount to the recipient. This enables us to track and keep one’s personal IT in good books.
To utilize the tax at a low or Nil rate under section 197, Form 13 has to be submitted.
When the Income is Non-Taxable?
1. The Scenario when the Income falls under Non-Taxability
2. When there is a loss
3. When the loss of previous years is Carried to the Current Year.
4. Eligible for Exemptions and Deductions in that Particular Year.
The taxpayers are eligible for a refund; those funds unnecessarily get blocked till a refund is received. To get a refund, they have to go through the process of filing their return to claim it
Law of Income-tax provides an option to obtain a certificate from the Assessing officer confirming either a lower rate of TDS compared to the rate specified under the law or a NIL rate of TDS,
Section 197 governs these provisions. In this article, we will discuss provisions on applying for a certificate for lower deduction of TDS.
What is covered under Section 197?
1. Section 192 – Salary income
2. Section 193 – Interest on securities
3. Section 194 – Dividends
4. Section 194A – Interest other than interest on securities
5. Section 194C – Contractors income
6. Section 194D – Insurance commission
7. Section 194G – Commission/remuneration/prize on lottery tickets
8. Section 194H – Commission or brokerage
9. Section 194-I – Rent
10. Section 194J – Fee for Professional or technical services
11. Section 194LA – Compensation on acquisition of immovable property
12. Section 194LBB – Income in respect of units of investment fund
13. Section 194LBC – Income in respect of investment in securitization trust
14. Section 195 – Income of non-residents
The application can be made where the income of any person attracts TDS as per the above-mentioned sections and the income of the recipient justifies non-deduction or lower deduction of income tax based on his estimated final tax liability.
Timeline for Application
There is no timeline or deadline for application under section 197. But it is usually advisable to submit an application at the beginning of the financial year. Sometimes applications can be made when there is a particular requirement.
Procedure for Application under Section 197
An application for nil/lower deduction of TDS should fill in FORM 13. An Assessing Officer can grant relief from TDS provisions. After Checking the evidence, If evidence abides by the rule that the currently existing and estimated tax liability of a person being lower than the number of TDS deducted, then they are eligible under section 197.
Regions of Mumbai, Tamil Nadu, and Karnataka have enabled online filing of Form 13 for faster processing of applications for the issue of certificates of lower/nil deduction of tax.
They will also be provided with a Certificate once the Assessing officer approves it
Section 197 is issued for a particular financial year and stands valid from the date of issue and throughout the financial year until it is canceled by the assessing officer before the actual expiry.
Documents to Submitted with Form 13
1. Signed Form 13
2. Copies of return of income along with enclosures and acknowledgment for previous 3 financial years
3. Copies of assessment orders for the previous 3 financial years
4. In the case of the assessee having a business or professional income, copies of financial statement along with audit report if any for the previous 3 financial years
5. Projected profit and loss account for the current financial year
6. Computation of income statement for the previous 3 financial years and estimated computation for the current financial year
7. Copy of PAN card
8. Tax Deduction Account Number of all parties responsible for paying you
9. E-TDS return acknowledgment for previous 2 financial years
10. Estimated income during the financial year
11. Any other documents depending on the nature of income
12. TDS default earlier
The assessing officer will review the documents and information submitted will contact further for any queries. Based on the AO’s analysis of documents, The certificate is issued or rejected for the application.
This is disposed of within 30 days of submission.
Find Your Form13 here: Form 13_Lower deduction