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Section 197

Updated on: Oct 12th, 2021


4 min read

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The provisions contained in Section 197 of the Income Tax Act, permits taxpayers a facility of Nil or lower tax rate deduction of TDS or exemption of TDS. For availing this benefit, assessees whose income would be liable for a tax deduction at source (TDS) need to furnish an application before assessing officer having jurisdiction over the assessee. The assessee concerned could apply for a certificate for Nil or lower deduction of TDS on the receipts in the prescribed Form No 13 to the jurisdictional assessing officer.

The AO would consider the total income of the assessee and the estimated tax liability, and accordingly, grant a certificate for TDS at Nil or lower rate to such applicant.

Procedure for Making the Application

In order to make an application in Form no 13, a taxpayer has to register in the portal https://contents.tdscpc.gov.in/ using his/her PAN. Upon registration under TRACES (TDS-CPC) website, a taxpayer has to log in and under the tab ‘Statements/Forms’, choose ‘Request for Form 13’.

An assessee has to file the application for Nil or lower deduction of tax online using a digital signature (DSC) or electronic verification code (EVC). Similarly, a taxpayer (buyer/licensee/lessee) whose payments are liable for the collection of tax (TCS) under section 206C can file an application in form no 13 seeking a certificate for Nil or lower tax collection at source.

Upon receipt of the application, the assessing officer has to determine the existing and estimated tax liability after taking into consideration tax payable on the estimated income of the ongoing financial year, tax payable on the assessed or returned or estimated income, as the case may be, of the previous four financial years, existing liability under the Income-tax Act, 1961.

The assessing officer has to also consider the advance tax payment, tax deducted at source and tax collected at source for the ongoing financial year till the date of making of the application. The Nil or lower TDS or TCS application is valid for the period for which it is issued or until the assessing officer cancels it.

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