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If you aim to efficiently manage your cash flow or optimize the allocation of working capital, Section 197 offers a crucial tool to potentially reduce or exempt Tax Deducted at Source (TDS) on your income. If you have valid reasons to believe that your annual tax liability is lower than the TDS deducted by your payer, you can request a Lower Tax Deduction Certificate (LTDC) or Lower Deduction Certificate (LDC) using Form 13 from the relevant income tax authority. Upon approval, the Income Tax department will issue a certificate specifying the reduced TDS rate applicable to you, which you can then provide to your payer. This proactive step helps prevent excessive TDS, thereby improving financial efficiency and eliminating the need for subsequent refund requests.

What is Lower Tax Deduction Certificate (LTDC/LDC)

A Lower Tax Deduction Certificate (LTDC) is issued by the Assessing Officer (AO) after evaluating your income subject to Tax Deducted at Source (TDS). If your anticipated income tax liability is lower than the TDS applicable according to the Income Tax Act, 1961, the AO will issue the LTDC instructing a specific deductor to deduct TDS either at nil/reduced rate.

How to Avail facility of Lower Tax Deduction Certificate (LTDC/ LDC)

To avail this facility of Nil deduction/Lower Deduction of Tax assessee whose TDS is likely to be deducted on certain receipts should file an application in Form 13 before the TDS Assessing officer via online mode through traces  https://tdscpc.gov.in/ as taxpayer,  who has a jurisdiction over his/her in that case. The Form should be submitted with all the required documents to be assessed by the Assessing Officer.

Form 13 serves as an application under sections 197 and 206C of the Income Tax Act, in conjunction with rules 28 and 37G. It facilitates the request for a certificate enabling the option of reduced deduction/collection or exemption from deduction/collection of Tax Deducted at Source (TDS).

Applicability of LTDC

This Section is applicable for any person for any Income whose TDS is deductible under the purview of section 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194K, 194LA, 194LBB, 194LBC, 194M, 194O and 195.

Process for making an application u/s 197

1. An application for nil/lower tax deduction in From 13 has to be filled to the concerned officer in online mode through Traces as a taxpayer.
   1. The officer may request additional clarification if deemed necessary.
   2. Upon the submission of clarification by the assessee, the officer will thoroughly review the documents. If the Assessing Officer is convinced that the Tax Deducted at Source (TDS) on the recipient’s total income should be applied at a nil or reduced rate, as the case may be, the Assessing Officer shall issue the certificate provided that the application submitted by the assessee is duly filled out in the appropriate form and accompanied by supporting evidence.
   3. Copy of the certificate has to be provided to the deductor by the assessee to justify the nil/ lower tax deduction.

Validity of the certificate issued u/s 197

Time period for which the certificate is valid is mentioned in the Certificate itself. It will be valid till the date the certificate is cancelled by the officer or the specified date in the certificate whichever is earlier.

Documents required for filling an application in Form 13:

1. Pan and Aadhar Card of Assessee 
2. Communication details: Mobile and Email id
3. Income Tax Login credentials(in case )
4. Copies of return of income along with enclosures and acknowledgment for previous 3 financial years and Computation of income
5. Estimated income during the financial year
6. Any other documents depending on the nature of income
7. Tax Deduction Account Number of all parties responsible for paying Income
8. Copies of Form 26 AS for the past 3 financial years

Time Limit of applying for LTDC:

The income Tax Act doesn’t prescribe any specific deadline for applying for a Lower Deduction Certificate (LDC), it is recommended to initiate the application process as all the documents related to the case have been procured.

For singular instances of income, it’s crucial to promptly submit an application for an LDC as soon as the need arises. Call Rebus Consultancy LLP today at 9138377750 to get a free Consultation regarding it. We are more than happy to assist you in this.

Benefits of LTDC:

Reduced Tax Withholding: The LTDC allows you to benefit from a lower tax withholding rate on payments received.

Maximized Tax Savings: By obtaining the LTDC, you can optimize your tax savings and improve your overall financial efficiency.

Improved Cash Flow: By reducing the amount of tax deducted at the source, LTDC enhances the cash flow of the assessee. This can be particularly advantageous for individuals and businesses with tight financial constraints or seasonal income fluctuations.

Enhanced Interest Earnings: By retaining more income upfront due to lower tax deductions, the assessee can invest or earn interest on the additional funds, potentially leading to higher overall returns on investments.

How Rebus Consultancy Can Assist You in Getting an LTDC(Lower Tax Deduction Certificate) in Gurugram and Delhi/NCR?

1. Get Expert Advice: Our tax team will review your situation and explain if you qualify for the LTDC for free. Call us at 9138377750 or mail us at info@rebus.co.in
2. Help with Documents: We’ll guide you through the required paperwork needed for your LTDC application.
3. Easy Application Process: Once your documents are set, we’ll handle submitting your LTDC application on the portal.
4. Tracking of Application: We’ll keep track of your application’s progress and let you know about any updates or clarifications raised by the Officer.
5. Clarification Assistance: If the tax officer asks for more info, we’ll support you through that process and will file your Clarification in an expert way to get the Lower Tax deduction certificate at the earliest

Connect with us today to get a free quote.

Get Started With REBUS Consultancy Today

Contact Rebus Consultancy LLP today to initiate the process of acquiring your Lower Tax Deduction Certificate. Our dedicated team is well-equipped to guide you through the intricacies of the application procedure, guaranteeing a seamless and effective experience. Reach out to us at 9138377750 or via email at info@rebus.co.in to get started.

FAQ

Q1: Can Form 13 be modified?

No, once the application for issuance of the certificate is filled, cannot modify the application. In case of any alteration, the application filed for LTDC is to be withdrawn before it is approved by the Officer and apply for a fresh Certificate by filling out the fresh application.

Q2: When LTDC will be issued

As per the Guidelines issued by the Commissioner of Income Tax to AO to dispose of the application u/s 197 within 30 days from the end of the month in which the application is completed in ALL respect is received.

Q3: Once the Form is filled, what is the next step?

Usually, Clarifications are asked by AO regarding the application submitted within the required time frame so constant tracking of the application is required.

Q4: Can Form 13 be filled not only for Lower Deduction of Tax?

No, Form 13 can be filled for both Lower deduction of Tax (LTDC) and lower collection of tax(LTCS) u/s 206C(9) of the Income Tax Act, 1961.

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