Sunday, November 19, 2023

Guidelines on Obtaining Lower/Nil TDS Certificate

 Comprehensive Guidelines on Obtaining Lower/Nil TDS Certificate through Form 13: Navigating the Legal Landscape

Date: 28 Sep 2023 | Notification No. 2/2023 [F. No. CPC(TDS)/197 Certificate/Annex-II/2023-24] | Income Tax | Circulars & Notifications | 2901 Views

In its pursuit of enhancing efficiency and transparency, the Central Board of Direct Taxes (CBDT) has issued Notification No. 2/2023, dated 27-9-2023, elucidating the intricate procedure for filing Form 13 to obtain a lower or nil Tax Deducted at Source (TDS) certificate. This comprehensive guide, in accordance with Section 197 of the Income-tax Act, 1961, and Rule 28AA of the Income-tax Rules, 1962, delves into the legal intricacies and procedural nuances governing the application process.

1. Legal Framework:

Section 197 of the Income-tax Act, 1961 empowers the Assessing Officer to grant certificates for deduction at lower rates or nil deduction of income tax, subject to the recipient's total income justifying such a deduction. Rule 28 of the Income-tax Rules, 1962 complements this provision, outlining the procedure for filing an application for such certificates through Form No. 13.

2. Electronic Filing of Form 13:

2.1 Registration at TRACES:

Taxpayers must initiate the process by logging into the TRACES website ( for the application of the certificate. For unregistered individuals, a mandatory registration using their Permanent Account Number (PAN) is required. The step-by-step registration process is available here.

2.2 Filing Form 13:

Upon successful registration, taxpayers can submit Form No. 13 electronically along with Annexure II and supporting documents. This submission can be executed using various authentication methods, including digital signature, electronic verification code, Aadhar-based authentication, or mobile OTP.

2.3 Tracking Application Status:

Applicants can track the status of their application through the TRACES website under the "Statements/Forms" tab using the "Track Request for Form 13/15C/15D" option.

3. Assignment of Application to TDS Assessing Officer (AO):

The assignment of applications to the TDS AO is based on details provided in Form 13, taking into account location and the amount of revenue foregone.

4. Processing by TDS Assessing Officer, Range Heads, and Commissioners of Income-tax:

4.1 Role of AO:

  • The TDS AO processes the application through TRACES-AO Portal, reviewing furnished information and documents.
  • If additional information is required, the AO can seek clarification online.
  • The AO approves/rejects the application based on parameters defined in Rule 28AA/28AB of the Income-tax Rules, 1962.

4.2 Role of Range Head:

  • The Range Head processes the application for administrative approval after logging into TRACES-AO Portal.
  • If clarification is needed, the application may be sent back to the AO.

4.3 Role of CIT:

  • The Commissioner of Income-tax (CIT) processes the application for administrative approval after logging into TRACES-AO Portal.
  • Clarifications may be sought from the Range Head, and the application may be sent back for further information.
  • The CIT takes the final decision on the application.

5. Issuance of Certificate:

  • Upon receiving administrative approval, the AO generates a certificate on TRACES-AO Portal under the path 'AO login->Lower/No Deduction Certificate->Certificate u/s 197(1)/206C(9)->Received from Range Head/CIT->Request Number->Generate Certificate/Close Request.'

6. Consumption/Tracking of Certificate:

  • Deductors receiving certificates report them in TDS statements, which are consumed based on the FIFO principle.
  • Deductors are advised to verify the consumption status before furnishing certificate details in TDS statements.

7. Conclusion:

This legal and procedural framework, effective from 01.10.2023, signifies a pivotal shift towards a more streamlined, transparent, and accountable system for obtaining lower or nil TDS certificates. The issuance, consumption, and tracking processes have been meticulously outlined to ensure a robust mechanism. It is imperative for applicants to bear the responsibility of sharing certificates with deductors. This circular, approved by the Director General of Income-tax (Systems), serves as a vital resource for taxpayers navigating the intricate landscape of TDS certificate applications.