Form 13 for TDS: How to Apply for a Lower Deduction Certificate

Tax deducted at source (TDS) can sometimes result in excessive tax deductions for taxpayers. In certain cases, the TDS amount deducted may exceed the actual tax liability. This often leads to the inconvenience of claiming refunds later.

To address this, Form 13 under Section 197 of the Income Tax Act allows taxpayers to request a certificate for non-deduction or lower deduction of TDS. This article outlines the purpose of Form 13, the application process, and essential details related to Section 197.

Latest Update

The Income Tax Department now allows Form 13 and Form 15E to be filed online through the TRACES portal. For the financial year 2024-25, these forms will be available until March 15, 2025. Taxpayers seeking a lower TDS deduction certificate for FY 2024-25 should apply before this deadline.

Understanding Tax Deducted at Source (TDS)

TDS is a method of tax collection where the payer deducts a portion of the tax from the payment before transferring it to the recipient. This ensures timely tax collection and minimizes the risk of evasion. TDS applies to various income types such as salary, interest, commission, rent, and professional fees.

Section 197A: Who Can Apply for TDS Exemption?

Both individuals and corporations can apply under Section 197 for reduced or zero TDS deduction. For specific income types, resident individuals or non-corporate entities may also submit Form 15G or Form 15H as a self-declaration for TDS exemption.

What is Form 13 Under Section 197?

Form 13 is designed for taxpayers who believe their actual tax liability is lower than the TDS being deducted. By submitting Form 13, individuals or businesses can request the Income Tax Department to issue a certificate authorizing their payer to deduct TDS at a lower or zero rate.

Upon approval, the certificate should be presented to the payer to ensure the correct TDS rate is applied, preventing excess deductions and minimizing refund claims.

Types of Income Covered Under Section 197

The following types of income are eligible for reduced or nil TDS deduction under Section 197:

Eligibility for Filing Form 13

Individuals or entities whose estimated tax liability justifies a reduced or nil TDS deduction can file Form 13. This often applies to freelancers, consultants, contractors, property sellers, or those earning interest income, dividends, or royalties.

When Should Form 13 Be Submitted?

The Income Tax Act does not specify a fixed deadline for submitting Form 13. However, filing the form early in the financial year is recommended to ensure the certificate covers all income earned during the year. Since TDS is deducted at the time of income accrual, early submission can prevent excess deductions.

Documents Required for Filing Form 13

• Duly signed Form 13
• Financial statements and audit reports for the past three years
• Estimated tax calculation for the current year
• Income statements for the previous three years
• Assessment orders, income tax returns, and acknowledgments for the previous three years
• Projected profit and loss statements for the ongoing financial year
• PAN card copy
• E-TDS return statements for the past two years
• Tax deduction account number (TAN) details of the payer
• Details of past TDS defaults (if any)
• Any other documents related to the nature of income

The completed application should be submitted to the jurisdictional Assessing Officer (TDS) within 30 days from the end of the month in which the application is received. The Assessing Officer may request additional documents or clarifications before issuing the certificate or rejecting the application. The certificate will specify the applicable TDS rate or state that no tax should be deducted.

Procedure for Filing Form 13 for Non/Lower Deduction of TDS

Form 13 can be filed either online or manually. Taxpayers in Mumbai, Karnataka, and Tamil Nadu must file Form 13 online for faster processing. To ensure smooth approval, accurate and complete information should be provided during submission.

If the Assessing Officer finds the application satisfactory, the certificate will be issued. This certificate must be attached to the invoice and provided to the payer to facilitate reduced or nil TDS deduction.

Steps to Apply for Form 13 Online

1. Log in to the TRACES Portal
2. Select 'Submit Request'
3. Choose 'Form 13' from the available options
4. Enter the required details and attach relevant documents such as financial statements, tax returns, and other supporting evidence
5. Submit the form to generate an acknowledgment receipt
6. The Assessing Officer will review and process the submission

Validity of the Certificate Issued Under Section 197

The certificate issued under Section 197 is valid for the specified financial year. It remains applicable from the date of issue until the end of the financial year unless canceled by the Assessing Officer before its expiry.

Conclusion

Form 13 provides a practical solution for taxpayers facing excessive TDS deductions. By applying for a lower deduction certificate, individuals and businesses can ensure accurate tax payments and reduce the need to claim refunds. Consulting a tax professional can help streamline the application process and improve the chances of a successful outcome.

If you have any further questions or need assistance, feel free to reach out to us at admin@ushmaassociates.com or info@nricaservices.com, or contact us via call/WhatsApp at +91 9910075924.

Stay Updated, Stay Compliant!

Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc