An assessee who wishes to apply for the certificate of no deduction or deduction at lower rate of TDS shall have to make an application in Form No. 13 as prescribed under the Income Tax rules, 1962.
Documents required to be submitted with Form 13
- Copy of PAN card
- A projected income statement for the current financial year
- Copies of Returns of income filed for last 3 assessment years
- Copies of Financial Statements along with Audit Reports, if audited of last 3 years
- Details of tax paid in last 3 assessment years
- Details of payment of advance tax/TDS/TCS relating to current previous year till date
- Details relating to various incomes and their sources of the assessee
- TAN of parties who make payments to the assessee
AO is required to dispose off the application within a time period of 30 days from the end of the month in which application is received by him.
If the application submitted is complete and AO is satisfied with the information and justification provided for deduction of lower TDS, he shall approve it and issue the certificate to the assessee. Every certificate issued has a unique 10 digit alpha-numeric no.
- To avoid deduction of TDS at a higher rate, the assessee will have to furnish a copy of AO’s certificate (attached to the invoice raised) to the payer and if the payer is satisfied that his name is specifically stated in the certificate, he will deduct TDS at the rate mentioned in the certificate.
- While filing his TDS return, deductor is required to mention the TDS certificate no. & PAN of the deductee and validate it on the TRACES website.
- The certificate issued for nil/lower deduction of TDS pertains to that particular financial year for which application has been made by the assessee. It is valid from the date of issue and expires at the end of that year unless it is cancelled by AO before its expiry.
Certificate for lower deduction of TDS should be obtained in following cases:
- Business is expected to incur losses
- Huge Losses are being carried forward from previous year
- Assessee is entitled to claim certain deductions/exemptions in that year.
- TDS is being deducted at a high rate but tax slab attracted by assessee’s income is lower