Q: What is a Lower TDS Certificate under Section 197?

Section 197 allows taxpayers to apply for reduced or nil TDS deduction if their actual tax liability is lower than the standard TDS rate. For example, if you're an NRI selling property, the buyer deducts 20.8% TDS. But if your actual tax (after exemptions under Section 54, etc.) is only 5%, you can get a certificate to reduce TDS to 5%. This improves cash flow and avoids the refund waiting period.

Question 1

What is a Lower TDS Certificate under Section 197?

Accepted Answer

Section 197 allows taxpayers to apply for lower or nil TDS certificate if their actual tax liability is less than the standard TDS rate. This improves cash flow and reduces refund waiting time.

Type of Income *

Gross Income from This Source (₹) *

Other Income (₹)

Salary, business income, etc.

Total Deductions (₹)

80C, 80D, capital gains exemptions, etc.

Question 2

Who should apply for a Lower TDS Certificate?

Accepted Answer

You should apply if: (1) NRIs selling property in India (20.8% TDS vs actual capital gains tax), (2) NRIs with rental income (31.2% TDS vs actual tax), (3) Freelancers/professionals with losses or low income, (4) Anyone whose actual tax is significantly lower than TDS rate. Don't apply if your income is high enough that standard TDS is appropriate - it wastes time and may invite scrutiny.

Question 3

How do I apply for a Lower TDS Certificate (Form 13)?

Accepted Answer

Apply on TRACES portal (www.tdscpc.gov.in): (1) Register on TRACES with your PAN, (2) Navigate to 'Request for Lower/Nil TDS Certificate', (3) Fill Form 13 with income computation, (4) Upload last 2 years ITRs and tax computation sheet, (5) Submit application. Processing takes 15-30 days. Once approved, provide the certificate to the deductor (buyer/tenant) before the transaction.

Question 4

What documents are required for Lower TDS Certificate application?

Accepted Answer

Required documents: (1) Last 2-3 years' ITRs with computation, (2) Computation showing estimated income and tax for current year, (3) Details of deductor (PAN, TAN, address), (4) For property sale: Sale deed/agreement, cost of acquisition, indexation calculation, Section 54 investment details, (5) For NRIs: TRC (Tax Residency Certificate) for DTAA benefits, Form 10F. Proper documentation speeds up approval.

Question 5

How long is the Lower TDS Certificate valid?

Accepted Answer

The certificate is valid only for the financial year for which it's issued. You must apply afresh each year. The certificate specifies: (1) Rate of TDS to be deducted, (2) Maximum amount up to which lower rate applies, (3) Validity period. If your income exceeds the certificate limit, standard TDS applies on the excess. Keep the certificate handy and provide copies to all deductors.

Lower TDS Certificate (Section 197)

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