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Section 197 of the Income-tax Act, 1961 – Deduction of tax at source – Certificate of lower deduction or non-deduction of tax at source

Instruction No. 7/2009 [F.No. 275/23/2007- IT-(B)], dated 22-12-2009

I am directed to bring to your notice on the subject of issue of certificates under Section 197. Instruction No- 8/2006 dated 13.10.2006, was issued stating that 197 certificates for lower deduction or nil deduction of TDS u/s 197 are not to be issued indiscriminately and for issue of each certificate, approval of the JCI/Add. CIT concerned need to be taken by the Assessing Officer (AO). Further, a letter of even number dated 6.10.2008 was issued stating that power of issue of certificates under Section 197 would ordinarily be exercised by the officers manning TDS Administration. However, instances are being brought to the notice of Board that the AOs are issuing certificates for lower or non-deduction of tax at source under Section 197 indiscriminately, in contravention of relevant Income Tax Rules and Instructions.

I am, therefore, directed to communicate to you that further to the contents of Instruction No-8/2006, prior administrative approval of the Commissioner of Income Tax (TDS) shall be taken (where the cumulative amount of tax foregone by non-deduction/ lesser rate of deduction of tax arising out of certificate under Sec, 197 during a financial year for a particular assessee exceeds Rs. 50 lakh in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmadabad and Pune stations and Rs. 10 lakh for other stations. Once the CIT (TDS) gives administrative approval of the above, a copy of it has to be endorsed invariably to the jurisdictional CIT also.

The content of the above instruction may be brought to notice of all officers working in your charge for strict compliance.

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25 Comments

  1. Vaishali says:

    What is the procedure to obtain a certificate under section 162(2) of the Income Tax ACt, 1961? Which form has to be fulfilled for obtaining the same?

  2. Chandru says:

    Dear Friends,
    I Had applied for 197 lower deduction certificate for my clients got approved. i had applied for originally in april,2015 i got the certificate, but recently i applied the enhancement of value now department tool says if they give the certificate of 2nd time applied certificate 1st will revoked and demand will be raised. i really got confused about this process. can any one help me out this issues.

    Rgds,
    Chandru

  3. Brosting says:

    I am exempted from income Tax on income from salary and liable to pay @ 0.01% under section 197(1) income tax act 1961, which form should I use for filling the Return

  4. Brosting says:

    I am exempted from Incomtax deductions and liable to pay only 0.01% Tax under sec 197(1) of the Income Tax act 1961. which form should I use to file the returns

  5. Sonam Tamang says:

    Sir/Madam
    I am an employee of NHPC Limited and an original resident of Sikkim State where 10 (26AAA) is enforced and accordingly no any IT has been deducted from my salary till date. But presently NHPC management is forced to obtain certificate from IT Deptt u/s 197 Act. As we approached to the IT Office, they told us that certificate u/s 197 Act is required only to those residents who resides u/s 10 (26) only i.e. some north east states/ tribals etc. Sikkim falls under 10(26AAA), for which we have already issued you a certificate for no deduction of tax from the salary. I request you for further clarify please.

  6. ABDUL ALEEM says:

    sir,

    24 Q1 if there is no deduction of TDS, i tried to file nil return it is asking at least one deductee record need for mandatatory for lower deduction or non deduction. when we have not deducted any tax there is no question of lowere deduction Under option A, for non deduction is it reight to tick option B or not? (Under section 197 certficate to be obtained for non deductees)

  7. Ganesh says:

    Sir
    we have vendor of development & testing professional under Ministry of heavy industries & public enterprises, Govt of India. Please inform whether we need certificate under section 197 for not to deduct the TDS.

    Can i deduct TDS/ we required any exemption certificate ?

  8. A G VINCHURKAR says:

    Sir
    Ours is training/educational Institute under Ministry of Power Govt of India. Please inform whether we need certificate under section 197 for not to deduct the TDS.
    A G Vinchurkar

  9. only heavy refund holder can demand for 197 lower rate certificate ? says:

    only heavy refund holder can demand for 197 lower rate certificate ?

  10. keyur shah says:

    this benifit’s of lower deduction is applicable to only political party mr.thomas …? as per your opinion….

    can you elaborate more on that ground please ….?
    and if we are having lower rate at 197 then what r the rates for the lower deduction ?

    and here if limit crosses 50 lac or 10 lac then only to give certificate or else …. please elaborate….?

  11. Thomas says:

    Circumstances: When the assessee or his representative is willing to pay money to officers ranging from ITO to CIT…or if he has got big political reference.

    Documents required: mainly currency Notes

    My apologies to sound circastic. However, the ground reality is so pathetic.Even very genuine requests are being rejected or delayed on flimsy grounds unless people are entertained. pls refer to the recent Mumbai HC comments in the case of L&T

  12. deepak says:

    under which circumstances a duductee can ask for deduction at lowe rate ? and what kind of documents should a duductee submit to get tds deducted at lower rate u/s. 197 of income tax act? please make it clear to me

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