How to Apply for a Lower Tax Deduction Certificate?

Neethi V. Kannanth | Last updated: 13 May 2021

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Quick Summary

If the Tax Deducted at Source (TDS) is higher than your actual tax liability, you can apply for a Lower Tax Deduction Certificate under Section 197 of the Income Tax Act, 1961. The application is made online through Form 13 on the TRACES portal. You'll need to log in, select the appropriate form, and fill in details about your income, tax liability, and payments, along with supporting documents.

According to section 197 of the Income Tax Act, 1961, when the actual tax payable on the income of the assessee is lower than the TDS to be deducted by the payer as per, then the assessing officer, if satisfied that the recipient of such income justifies the deduction of income tax at any lower rate

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FAQ :

A Lower Tax Deduction Certificate is granted by the assessing officer if they are satisfied that your actual tax payable on income is lower than the TDS to be deducted, allowing for deduction at lower rates or no deduction at all.

You can apply for a Lower Tax Deduction Certificate under various sections of Chapter XVII of the Income Tax Act, including sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194K, 194LA, 194LBB, 194LBC, 194M, 194O, and 195.

The application is made online by logging into the TRACES portal and filling out Form 13.

You will need to provide your status, residential status, PAN, email, mobile number, state, district, details of existing income tax liability, estimated total income, total tax payable, details of exempt income, and details of advance tax paid or TDS already deducted.

Required documents include projected balance sheet and computation for the financial year, audited balance sheet and computation for a previous year (if applicable), copy of exemption certificate (if claimed), assessment orders for the last four years (if any), ITR acknowledgments for the last four years, and any other relevant documents like property papers or agreements.