Income Tax Form 13- Application For Lower or Nil Deduction of TDS

Meaning of TDS

TDS (tax deduction at source) is a direct tax mechanism where the tax is collected from the source of income. It means anyone making the payment is required to deduct a portion while making certain payments such as salary, professional fees, commission, rent, etc.  

The person or company liable to deduct TDS is called a deductor, and the person or company receiving the payment is called a deductee. 

TDS applies to specific incomes only. Further, different TDS rates are prescribed in the different sections of the Income-tax act, depending upon the type of payment and assessee. Now, the question arises what is the relevance of Form 13 and how to avail the benefit of no deduction or lower deduction of TDS.

Need of Section 197 and Form 13

In various situations, the deductee’s total tax liability (computed as per income tax slabs) is less than the TDS deducted. Now, in such cases, due to some specified incomes only(covered under the TDS provisions), the deductee has to claim the refunds at the time of filing an income tax return, which is a time-consuming process for the income tax department to issue the TDS refunds. 

Therefore, to simplify the process and reduce the hardship faced by the taxpayers, the government introduced section 197.

Section 197 of the income tax act allows the taxpayers to make an application and avail the benefit of Nil or lower deduction of TDS. Any person, including corporates, can make an application under section 197.

Income Tax Form 13

As per section 197 of the Income-tax Act wrt Income tax Form 13, the assessee has the option to make an application for the lower or NIL deduction of TDS. 

However, the assessee has to get approval from the assessing officer by submitting an application in Form 13. And, the officer issues a certificate of lower/nil deduction of tax at source under section 197 of the income tax act. 

Download Form 13 

https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007840.pdf

• Validity of the application 

The application made under section 197 remains valid from the date of issuance of the certificate up to the end of the financial year. Therefore, one application relates to a particular financial year only. For the next financial year, you are required to make another application. 

However, the TDS officer can cancel the certificate before the expiry of a financial year. 

Details/documents required under Income Tax Form 13

• Personal information such as name, PAN of the assessee, email ID and mobile number
• TAN No of tax deductor
• Income details, tax payments of the preceding three years and estimated current’s year income
• Details of the payment are being received. 
• Details of pending scrutiny assessment or penalty proceedings 
• Information related to the TDS paid during the current year.
• Assessees carrying business or profession requires to submit the copies of financial statement, audit report of any for previous three financial years and projected profit and loss account for the current financial year. 

Sections on which Income Tax Form 13 is applicable

It is important to consider here that Form 13 of the Income-tax Act can be filed only for the specified TDS sections, including 

• Section 192 – Salary Income 
• Section 193 – Interest on securities 
• Section 194 – Dividend income 
• Section 194A – Interest on other than securities 
• Section 194C – Contract income 
• Section 194D – Insurance commission 
• Section 194G – Commission on lottery tickets
• Section 194H – Commission on brokerage 
• Section 194I – Rent income 
• Section 194J – Fees for professional or technical services 
• Section 194LA – Compensation on acquisition of immovable property 
• Section 194LBB – Income in respect of units of investment fund 
• Section 194LBC – Income in respect of investment in securitization trust
• Section 194O – TDS on payment made to E-commerce participants 
• Section 194M – TDS on payment to resident contractors and professionals 
• Section 195 – Income of non-residents 

How to file Form 13?

Here are the simple steps for filing Form 13 through the TRACES portal (Assessee must be registered at TRACES portal):

Step 1: Login TRACES and select “Request Form 13” under the tab of “Statement/Form.”

Step 2: Form 13 will be displayed on your screen in editable form. Here, you need to fill in the required details and upload the documents. 

Step 3: Submit Form 13 by using EVC or DSC. 

How to generate Form 13 certificate?

On successful submission of Form 13, the application shall be forwarded to the TDS assessing officer. And, the officer shall be responsible for verifying the information and documents furnished in Form 13 within 30 days from the end of the month in which the application is received. 

Further, based on details submitted by the assessee, the assessing officer determines the existing and estimated tax liability of the current year. If the officer is satisfied that the total income of the recipient justifies the deduction of income tax at any lower rates or no deduction of income tax, he will issue the Form 13 certificate. You can download the certificate at the TRACES portal.