Lower Tax Deduction Certificate

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1000+

NRI Returns

2 MN+ $

TAX Saved

5MN $+

Penalty Saved

500+ Case

Litigations Handeled

Our Process

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After the successful application submission, the assessing officer will examine the documents

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The Assesing officer may seek additional information as may be required

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You will be able to download the Lower Deduction Certificate from the Traces portal once it is available online

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The rate specified in the certificate will be further used to deduct the tax

Documents Required

The application form must include the following details-

Your mobile number

E-mail address

A copy of your PAN card

The Tax Deduction Account Number (TAN) of each person who is responsible for making the payment

Copies of your income tax return

Computation of income from the three preceding financial years

Copies of Form 26AS from three previous financial years

You must also send copies of your financial statements for the preceding three financial years, along with any applicable audit report, if you have revenue from a business or profession

You also need to submit a projected profit and loss account for the current financial year, an estimate of your income for the current year, and any other required documents based on the nature of your income

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Frequently Asked Questions

  • Businesses that are losing money
  • Assessees who have carried over losses to be adjusted against income in the following year
  • Assessees who make less than the applicable basic exemption limit on their net total income
  • Money received from an Indian buyer for the sale of property in India by a non-resident seller
  • A client who needs to have tax deducted at source under section 195 is paying money to a business without a permanent establishment in India

  • According to the Income Tax Act, there is no deadline for submitting an LDC application.
  • However, as TDS is applied to income received throughout the current financial year, it is best to apply for the certificate before the start of the financial year in case you are getting regular revenue all year long.
  • Applications for one-time revenues should be submitted as soon as needed.

  • If the assessing officer revokes a reduced deduction certificate before it expires, it is valid for a single financial year that starts on the date of issuance and ends at the completion of that financial year.

  • Lower Tax Deduction: LDC offers lower rates of Tax Deduction Service (TDS) deducted from income and zero TDS in some cases, which leads to better cash flow management.
  • Less Compliance Burden: LDC avoids the need for regular TDS returns and certificates, reducing the compliance burden.
  • Lower Tax Liability: LDC reduces taxpayers' tax liability, which helps in tax planning and managing liabilities.
  • Irresponsive towards Refunds: LDC helps avoid the need for refunds if TDS is deducted at a higher rate than necessary.
  • Savings on Interest: LDC helps avoid interest liabilities on excess taxes paid due to higher TDS deduction rates.

  • Section 197 application can be filed by the taxpayer whose income falls under the following categories
  • Salary income: This includes wages, bonuses, and other earnings from your employer.
  • Interest on securities: This applies to interest earned on investments like bonds, debentures, and government securities.
  • Dividends: This refers to the portion of a company's profit that is distributed to its shareholders.
  • Interest other than interest on securities: This covers interest earned from fixed deposits, savings accounts, and other similar sources.
  • Contractor's income: This includes payments made to contractors for carrying out specific work or services.
  • Insurance commission: This is the commission earned by insurance agents for selling insurance policies.
  • Commission/remuneration/prize on lottery tickets: This covers income from selling lottery tickets, commission earned on lottery sales, and any prizes won in lotteries.
  • Commission or brokerage: This refers to fees earned by brokers for facilitating transactions in the stock market or other financial markets.
  • Rent: This is the income earned from leasing out property.
  • Fee for Professional or technical services: This covers fees earned by professionals like doctors, lawyers, chartered accountants, and engineers for their services.
  • Compensation on acquisition of immovable property: This applies to compensation received for acquiring land or building.
  • Income with respect to units of investment fund: This refers to income earned from mutual funds or similar investment schemes.
  • Income in respect of investment in securitization trust: This covers income earned from investing in securitization trusts.
  • Income of non-residents: This refers to income earned in India by individuals or entities who are not residents of India.

  • Step 1 - Login to TRACES: Go to the TRACES portal and log in using your registered user ID and password.
  • Step 2 - Navigate to the Validation Section: Once logged in, locate the “Statements/Payments” tab and select the “197 Certificate Validation” option from the dropdown menu.
  • Step 3 - Enter Certificate Details: On the validation page, enter the following details:
  • The 10-digit certificate number.
  • The taxpayer's PAN.
  • Select the relevant financial year.
  • Step 4 - View Certificate Information: Upon entering the details and submitting, the portal will display information about the certificate, including:
  • Validity period
  • Authorized lower TDS rate or nil TDS status
  • Any consumed amount

The validity of a Section 197 certificate is typically limited to the remaining period of the financial year in which it's issued. This means it generally expires on March 31st of that year. You must reapply for a new certificate if you require a lower TDS rate or nil TDS for the following financial year.