Where a taxpayer believes that its total income justifies withholding of tax at a lower rate, it can apply to the assessing officer for a certificate of withholding tax at a lower rate. The application by the taxpayer to the AO for a certificate of withholding tax at a lower rate is governed by Rule 28AA of the Income-tax Rules, 1962 (the Rules).
1. Every finance professional are making estimated accounts of the company and based on that you can also prepare the estimated computation of total income assuming same adjustments as done for the previous year.
2. Determine the expected tax liability of the company
3. Determine the TDS deducted and advance tax paid till date and also determine the expected TDS on the revenue for the balance period of the financial year.
4. Based on the above, review the tax payable/ refundable periodically.
5. In case there is expected tax refundable for the company, the finance professional should not block this company’s fund in the hands of Income tax department for next 2-3 years and should apply for lower TDS application to the TDS department immediately.
6. For applying lower TDS certificate to the TDS department, following documents are required to be submitted :
7. After submitting the aforesaid application to the TDS department , the AO will review your documents and they may ask further queries & documents to satisfy that your company is eligible for getting the lower TDS certificate.
8. It must be noted that AO is not bound to issue TDS certificate, once the application had been filed. The AO issue the certificate based on the merit on case to case basis.
9. You must provide the correct TAN of all the parties for whom you want the TDS certificate as now a days, department are issuing only system generated certificate based on the TAN.
10. As we all know that, now department are not issuing nil TDS certificate to anyone. Hence, you must apply only for lower TDS certificate only and must mention the lower rate as required.
Republished with Amendments
Also Read recent communications related to Lower / Nil rate TDS deduction Certificate
|1.||Certificates for lower rate/nil deduction/collection of TDS or TCS- Reg|
|2.||Lower/nil rate of TDS/TCS applications to be disposed liberally by 27.04.2020|
|3.||Apply Lower/Nil tax deduction certificates before Financial Year Start|