TDS Exemption Certificate

TDS EXEMPTION CERTIFICATE OR LOWER TDS CERTIFICATE – APPLICATION UNDER SECTION 197/195 – ONLINE APPLICATION

Background

  • Under Income Tax Act 1961, as per the TDS provisions, various TDS rates have been prescribed for various kind of transactions.
  • In various transactions, it happens that the actual tax liability in the hands of tax payer is lesser than the TDS deducted on that transaction.
  • In case of transactions, which fall under section 195 ie TDS on payment being maded to Non-residents, there is high probabiliy of higher rate of TDS than the actual liability arising on that transaction.
  • One of the transaction nature, which fall under section 195, is sale of immovable property by the Non-Residents (including NRIs, OCIs, PIOs etc). In these transactions, the TDS rates are much higer than the actual tax. Eg if an immovable property is being sold @ Rs 2 Crore, and actual capital gain arising on same is only Rs 10 Lakh (which can also be claimed exempted by applying tax saving mechanisms by investing the money in new house or bonds), however, by applying th plain provisions of section 195 the tax can be deducted @23.92% (i.e 20% plus surcharge & education cess) though the actual tax shall be very very less.
  • Similarly, on other transactions (of non-residents u/s 195; or residents under other provisions), there is a probability that TDS rate is more than the actual tax.
  • To seek relief in these kind of transactions, there has been provided some provisions in section 195 and 197, where the assessee or authorised representative can approach the Jurisdictional Authority and apply for a TDS Exemption Certificate (if actual tax liability is nil) or Lower Rate TDS Certificate (if actual tax liability is lesser than the proposed TDS).
  • To apply the TDS Exemption Certificate or Lower TDS Certificate, the assessee need to prepare an applicaton along with supporting documents and submit the same with the respective authority.
  • This application was used to get filed manually with the respective authority office.
  • However, recently, vide Notification No 74 dated October 25, 2018, Govt of India (Ministry of Finance) has modified the process from manual to online. Hence, now the application shall be prepared and submitted online.

Online Applcation Process For Filing TDS Exemption/Lower TDS Certificate.

  • Reference to notification of Govt of India (Ministry of Finance) dated October 25, 2018, now all TDS Exemption Certificate/Lower TDS Certificate has to be prepared and submitted online.
  • For the onine application, initially the applicant need to create an account on the TRACES website ie www.tdscpc.gov.in.
  • In the case of NRIs, OCIs, PIOs, the registration need to be done in the tax payer category.
  • After entering into the homepage select “Request for form 13” under statements/Forms tab.

 

  • Select the relevant Financial Year and Form and Proceed.
  • In the next step, documents to be attached at relevant places, in following manner:
  1. Estimated tax computation ( to be attached at template provided by site)
  2. Income tax return for the last 4 AY
  3. Other Relevant Documents (eg In case of property sale matter by NRI docs can be Property purchase deed, sale MOU, passport copy etc)
  • On doing above, portal will process the application and generate Request Number and ask for verification.
  • Verification can be done by using DSC or E-verification through Net Banking.
  • After submission we can trace our request through Request Number.
  • Hereafter, the application shall be processed at the jurisdictional Assessing Officer level.
  • On verifying the documents at AO office, AO may provide a date of hearing on online portal along with email.
  • After doing needful wrt hearing etc, the AO will issue the TDS Exemption or Lower TDS Certificate.

Exemption From Online Process – CBDT Order U/s 119(1) dated Dec 24, 2018

To remove genuine hardship being faced by certain applicants in filing online application in Form No 13, CBDT allows:

  • NRIs, who are not able to register themselves on TRACES, to file manual application in Form 13 before TDS officer or in ASK CENTERs till 31.12.2018.
  • Resident applicants to the file manual application in Form 13 before the TDS officer or in ASK CENTREs till 31.12.2018.

This Article clarifies certain FAQs of NRIs, PIOs and Others eg:

  • I am an NRI and wish to sell an immovable property in India, however, buyer is proposing 20% plus surcharge & cess as TDS on the sale amount. What to do?
  • What is the process of applying lower rate TDS Certificate or TDS Exemption Certificate?
  • How to apply online for TDS Exemption Certificate by NRIs?
  • What are the documents to be enclosed for applying TDS Exemption Certificate by NRI?
  • Whether there is any exemption to Non-residents (including NRIs, PIOs, OCIs) for applying TDS Exemption Certificate online.
  • I am an NRI. I wish to apply for a TDS Exemption Certificate or Lower Rate TDS Exemption Certificate. How to apply the same? And What is the procedure?
    NRI News: December 25, 2018
Contacts

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