Tds return - lower deduction code?

·         Guidelines for reporting TDS transactions not exceeding / exceeding threshold limit in quarterly TDS statements (as issued by Directorate of Income Tax - Systems).

Below guidelines may be referred, if deductor wishes to report the transaction in the quarterly TDS statement where no tax is deducted as threshold limit (as per the provisions of the Income tax Act) of amount paid/credited to deductee has not exceeded in the initial quarter (s) but has exceeded in subsequent quarter.

1)    Flag “Y” may be selected in the field of ‘Reason for non deduction/ lower deduction/ higher deduction’ to highlight transactions where TDS is not deducted as the threshold for deducting tax has not exceeded.

2)    Threshold flag can be quoted only  against the following section codes in corresponding challan details:
193, 194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194G, 194H, 194I, 194J, 194LA

3)    Following approach may be referred for reporting threshold transactions in quarterly statements:

1.    In case there is no deduction of tax in the first two quarters of a F.Y. where the prescribed rate of deduction as per Income Tax Rules is 10%. In the third quarter the threshold limit exceeds. 

dear ram babu

which code we use for lower deduction, I think It may be "A", but I am not sure, if you know please write.

Dear All 

pls find below

In a TDS Return, Code 'A' is to specify that TDS has been deducted on lower rate due to application of Section 197 while Code 'B' is to specify that TDS has not been deducted due to application of Section 197A.

Reason where code used for Lower / Higher / No Deduction in TDS Returns

Code A - Lower / No Deduction due to Certificate under Section 197: If the deductor has received a certificate under Section 197 allowing for a lower or no deduction of TDS.

Code B - No Deduction due to Declaration under Section 197A: Allowed only for specific sections (194, 194A, 194EE, 193, 194DA & 192A). If the deductor has received a declaration under Section 197A, allowing for no deduction of TDS.

Code C - Higher Rate of TDS due to Non-Availability of PAN: If the deductee does not have a PAN (Permanent Account Number), higher TDS rates may apply.

Code T - Exemption for TDS on Payments to Transporters under Section 194C: TDS is exempted on payments to transporters if certain specified conditions are fulfilled under Section 194C.

Code Y - No Deduction due to Amount Below Threshold Limit: If the payment to the vendor/party does not exceed the threshold limit, no TDS is required, and it may be reported with the 'no-deduction' code 'Y' in the remarks. These remarks are typically used in the context of deducting tax at source in various financial transactions, and they provide information on the specific reasons for lower, higher, or no deduction of TDS.