Latest Update: The tax department has enabled online filing of Form 13 and Form 15E on the TRACES portal. However, for the current FY 2024-25 these forms will be made available till March 15, 2025. This means if you want to apply for a lower TDS deduction certificate by filing Form 13 or 15E for FY 2024-25 then hurry up.
What is Tax Deducted at Source (TDS)?
Tax deducted at source (TDS) is a way of collecting tax from the source of income. It means that the person or organization that pays you will deduct a certain percentage of tax from your income before paying you. This way, the government gets its share of the tax without any delay or evasion. TDS applies to different types of income, such as salary, interest, commission, rent, etc.
Section 197A: Who Can Apply for TDS Exemption?
Any individual, including corporations, can apply for Section 197. However, for specific income categories, resident individuals or non-corporate entities can also submit a self-declaration using specified forms (Form 15G/Form 15H) to exempt TDS deduction.
Form 13 is a crucial form for taxpayers who believe their actual tax liability is lower than the TDS being deducted by their payer (client, employer, etc.). By filing this form, you can apply to the Income Tax Department for a lower TDS certificate or even a nil TDS certificate, if eligible.
If approved, the department will issue you a certificate specifying the lower TDS rate, which you can share with your payer to ensure lower tax deduction at source.
This way, you can avoid excess tax deductions and save yourself from the hassle of claiming a refund later.
Type of Income Covered Under Section 197
If the recipient's income falls under the following sections, he can apply for section 197.
| Sections |
Types of Incomes |
| 192 |
Salary Income |
| 193 |
Interest on securities |
| 194 |
Dividends |
| 194A |
Interest excluding interest on securities |
| 194C |
Contractors income |
| 194D |
Insurance commission |
| 194G |
Commission/prize/remuneration on lotteries |
| 194H |
Commission or brokerage |
| 194I |
Rent |
| 194J |
Fee for technical or professional services |
| 194LA |
Compensation on acquiring immovable property |
| 194LBB |
Income of units of investment fund |
| 194LBC |
Income of investment in securitization trust |
| 195 |
Non-residents’ income |
Eligibility to file Form 13 depends on your income type falling under certain sections of the Income Tax Act — commonly for freelancers, consultants, contractors, property sellers, and those earning interest income, dividends, royalties, etc.
If a person's Income falls under any section mentioned in the above chart, and individual’s estimate of tax liabilities justifies the lower deduction or non-deduction of TDS. In such a case, the individual can file Form 13.
The Income Tax Act does not specify any timeline for filing an application through Form 13. The payee has the flexibility to submit an application at any point during the financial year. Nonetheless, initiating the application process at the start of the year is advisable to include income earned throughout the year, considering that TDS is deducted at the time of income accrual.
- Signed form 13
- Copies of audit reports and financial statements of the previous 3 years
- The estimated calculation for the current year and copies of Income statements for the previous 3 years
- Copies of the assessment order, income returns, and acknowledgment for the previous 3 years
- Projected profit and loss statements for the current financial year
- PAN Card
- E-TDS return statements for the previous 2 years
- Tax deduction account number for the payers
- Any other documents relatable to the nature of Income
- Previous TDS defaults
The application should be submitted to the jurisdictional Assessing Officer (TDS) within 30 days from the end of the month in which it is received. The Assessing Officer will review the documents submitted and may ask for further explanations and documents before issuing the certificate or rejecting the application. The certificate will specify the rate at which tax is to be deducted/collected or that no tax is to be deducted/collected. The certificate will be valid for the period specified therein or until the Assessing Officer's cancellation.
- An application of Form 13 of income tax for non-deduction or lower deduction of the TDS requires to be filled out and can be sent via email or post to the assessing officer.
- Form 13 can be filed online or manually; however, taxpayers in Mumbai, Karnataka, and Tamil Nadu can only fill the Form 13 of income tax online for faster processing.
- It is advisable to fill the complete form with accurate details for faster processing in the first instance.
- If the application is proper, then the Assessing officer will issue the certificate.
- A copy of the certificate is attached to the invoice and given to the TDS deductor for a lower deduction or non-deduction of TDS.
- Log into the TRACES portal(https://contents.tdscpc.gov.in/)
- Select 'Submit Request'
- Choose 'Form 13’
- Fill in details, attach necessary documents, such as such as financial statements, tax returns, and any other supporting evidence, and submit.
- An acknowledgment receipt will be generated. The Assessing Officer will review and process the submission.
What is the Validity of an Application Made Under Section 197?
Form 13, issued under section 197, is issued for a specific financial year and is valid for the FY in question. It stands valid from the date of issuance throughout the financial year unless it gets canceled by the assessing officer before its expiry.
Excess TDS deductions tie up your working capital until a refund is processed — which can take months. Avoid unnecessary cash flow stress by applying for the right rate before the deadline. Confused and want to know if it applies for you? Consult Tax2win Tax Expert
