Lower/Nil Deduction certificate


The concept to deduct TDS is introduced to deduct tax from the source of income so that the government can prevent tax evasion. TDS is deducted when credited in the books of accounts or make payment to the recipient whichever is earlier basis. So if a person whose income is in the taxable brackets is liable to comply with the provisions of TDS. But there are some cases where a taxpayer’s income for that year is not going to come under the taxable limit, because of reasons like he has incurred loss for the current year or he has carried forward som previous losses for set-off in the current year or he is eligible to claim for certain deductions or exemptions in the current year. So as he is not liable to pay any taxes he wants that the TDS will not deduct from their income in the current year, although if it is already deducted or will deduct on further income taxpayer can claim a refund by filing there return and gets back with interest but, it is not feasible to make money stuck in this system for some period. So a taxpayer who is under these situations wants not to deduct TDS from income so he applies for a lower rate/ Nil deduction certificate so that no deduction will be made from income.

Eligibility & Timeline:

Application for lower/nil deduction certificate can be made where the income of any person attracts the provisions TDS and income of the recipient specifies that non-deduction or lower deduction is applicable as per the calculation of his tax liability. There is no deadline to apply for this certificate but it is advisable to apply for the certificate at the beginning of the financial year in order to get the benefit of this throughout the year on your earnings.

You have to submit FORM 13 to get the certificate.

Documents required:

  • Copy of PAN card.
  • Tax deduction account number of all the parties who are going to pay you.
  • Projected profit and account for the current year in which you need a certificate i.e current financial year.
  • Signed form 13
  • In the case of business income last 3-year financial statement and if applicable then audit report as well.
  • Previous 3 years of Income-tax return (ITR) copies.
  • Any other documents depending upon your nature of income.   

Procedure for filing FORM 13:

  • An application for nil/lower deduction of TDS by filing FORM 13 to the Assessing Officer of the TDS department for obtaining permission is made. This form can be filed either by online or manual mode. You can log on to the TRACES website.
  • The taxpayers should have to file complete and correct details required during processing the application made through Form 13 by the taxpayer.
  • If the Assessing Officer satisfies the application made by the taxpayer through this form, he would process the issue of the lower/nil deduction certificate.
  • After obtaining this certificate the copy is this certificate now can be given to the persons from whom you are going to receive income.

This certificate is applicable from the date of the issue and till the current financial year unless it is canceled by the assessing officer of the TDS department before the expiry of the certificate.

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