In this article I are covering all the provisions related to lower or no deduction of tax i.e in depth discussion of Section 197. Also I am covering here procedure of application of lower or no deduction in Form 13.

1. Lower deduction/non-deduction of tax

(a) Section 197 : – Section 197 gives a right to the assessee to obtain a certificate from the Assessing Officer that tax may be deducted at a lower rate than prescribed in Sections 192,193,194,194A,194C,194D,194G,194H,194I, 194J, 194K, 194LA, and 195, by making an application. He can even apply for no deduction of income- tax at source. Income-tax rules have prescribed Form No. 13, under Rule 28 for such application.

(b) Section 197A : – Section 197A provides that no deduction of income-tax at source is to made u/s 194 or194EE in case of an individual resident of India if the individual gives the declaration to the person responsible for paying the income covered by these sections in duplicate in prescribed proforma and verified showing that the tax, on his estimated total income of the year, including the income from which tax is to be deducted will be nil. Form No. 15G under Rule 29C has been prescribed for such application.

(c) Section 197A(1A) : – Similarly, for sections 193, 194A and Section 194K, exemption u/s 1 97A, from deduction of tax, can be obtained by any person (except a company or a firm ) on furnishing a declaration in duplicate and in prescribed proforma in a similar manner. Similarly for sections 193, 194 ,194A, 194EE or 194K, exemption from TDS u/s 1 97A can be obtained by an individual resident in India who is of age of 65 years or more during the previous year.

(d) Section 197A(1 B) : – The provisions of this section shall not apply when the gross total income of the assessee from all sources exceeds the maximum amount which is not chargeable to Income Tax.

The person responsible for paying the income without deduction of tax is duty-bound to deliver to the Chief Commissioner of Income-tax or Commissioner of Income-tax, one copy of such declaration before the 7th day of month following the month in which the declaration has been furnished to the payer by payee (i.e. Assessee).

2. Interest to Government etc. –

Interest or dividend or any other sum payable to the Government, or Reserve Bank of India or a Corporation established under a Central Act, or a Mutual Fund specified u/s 10(23D), payable to it by way of interest or dividend in respect of securities or shares owned by it or any other income accruing to it, is not subject to deduction of tax at source (S.196).

3. Procedure for filing of application of lower or non deduction:

Step 1: Login to TRACES website with your User ID, Password, PAN for the Taxpayer and the Verification Code. Landing page will be displayed on Screen.

Step 2: Go to ‘’Statements/Forms’’ tab and click on Request for Form 13 to initiate request. A Pop-Up window will be displayed (If DSC is not registered). Click on „Yes to proceed further.

Step 3: Select the residential status as Resident.

Step 4: Check list for Section 197/ 206C(9) will appear on the next screen. Click on Proceed button.

Step 5: Form No. (Form-13) will be auto-populated, select Financial Year and Request Type from drop down then click on Proceed button.

Step 6: Select option with (TAN & Amount) – Deductor TAN (s) & Amount both are available. A Pop up will be displayed on the screen to select the number of entries. Select on Less than or equal to 50 (Online) option to submit request through online.

Step 7: User need to fill details which needs to be furnished in Form -13, some of the details are auto-populated on the basis of TRACES profile. Also user need to select atleast any one declaration for exemption under section 10, section 11 or section 12 for certain entities covered under Income Tax Rule 28AB or not.

Step 8: Scenario 1: If user selects a declaration for exemption under section 10, section 11 or section 12 for certain entities covered under Income Tax Rule 28AB.( Either Declaration No. 1 or Declaration No. 2)

After filling up the basic details Annexure-I will open to fill the annexure details.

Step 9: Scenario 2: If user selects a declaration of Other than Rule 28AB of the Income Tax Rules 1962. (Declaration No. 3)

Select the type of annexure from dropdown and click on Proceed button. User has to select Annexure-I for No/Lower Deduction in case of Tax deduction at Source (TDS) or Annexure-III for Lower Collection in case of Tax Collection at Source (TCS).

Click on Template button to fill Computation of Estimated Income of Financial Year for which certificate is sought then submit. Details saved successfully message will appear on screen.

Step 9: After submitting declaration, click on Preview & Submit button to review the Form-13 details. Click on Submit for final submission.

Step 10: After clicking on submit button, a pop-up will be displayed to validate the Form-13 request through DSC (Digital Signature Certificate) E- Verification (Through Internet Banking) or Mobile OTP or Aadhaar Number.

Republished with Amendments


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May 2021