prpri Develop system to issue Lower deduction certificate u/s 197 through TRACES Site: ICAI Develop system to issue Lower deduction certificate u/s 197 through TRACES Site: ICAI


TDS CPC has been one of the successful projects of the Government for online tracking of the Tax deducted, deposited, corrections and reconciliations. Now with this system the govt. is tracking the default and issuing online notices and communication for immediate correction and payment of shortfall as the case may be.

However one area of TDS relating to lower Tax deduction certificates (LDC’s) issued by the jurisdictional tax authority is another area field which needs to move online.

As per the prevailing practice an assessee has to file form 13 requesting the officer handling TDS for a LDC. The officer calls for information relating to  Returned/ assessed income from the assessee and finds out the average rate at which tax is paid by the assessee. Based on this rate, he issues LDC. Thus it is only an arithmetical calculation which is based on the data which is already available with the department in its computer systems.


It is proposed that TRACES site should develop an utility to do the above calculation for issuing such certificate in time bound manner. The existing Form 13 should be modified accordingly and various fields related to returned income, tax paid, tax deducted should be automatically linked with the data already available in the TRACES Site. As all tax Returns are being E filed also the tax audit reports are being uploaded on the system the information is already in the public domain, it is merely a question of putting proper links and checks to cross verify the details fed by the assessee ( the onus is on assesse self-certification ). In case there is some discrepancy the system should throw up the defaults/ errors which need to attended by the tax payer and resubmit the form.

This will be in line with the government’s keenness to increase the use of technology in service delivery to public and also save a lot of time/ trouble involved in obtaining a lower rate certificate for TDS. Additionally, as a part of go green initiative the requirement of issuing of TDS certificates should be dispensed with, going ahead.

Source- ICAI Pre- Budget Memorandum–2018 (Direct Taxes and International Tax)

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July 2021