Every year out of the total ITRs filed 60%-70% returns are Nil returns meaning there is no tax liability. The ITD also takes sufficient time to release the refund of lakhs of rupees claimed by taxpayers. There are some instances wherein the tax liability is low but excess TDS is deducted at prevailing rates, resulting into refund. TDS is the tax deducted from your income when it arises, basically as a check to keep a track of incomes earned. To avoid the same, a taxpayer can file an application in Form 13 for nil/lower deduction of TDS/TCS.
What is Form 13?
Form 13 is an application through which taxpayer can request for nil/lower deduction certificate of TDS/TCS. Section 197 of the Income Tax Act, allows deducting TDS at a lower rate or at nil rate by submitting an application along with required documents. Similarly, Section 206C(9) allows collecting TCS at lower or nil rate. If the Assessing Officer gets satisified on the basis of the documents attached, he will grant the certificate. The deductee has to furnish such certificate to deductor for nil/lower deduction of TDS. The deductor has to mention the certificate number while filing TDS Form to justify lower deduction.
Example
Ajay is a freelancer and has earned income from a project with a company. The company paid fees of Rs. 5,00,000. During the FY, he has no other income. The Company will deduct TDS under section 194J at the rate of 10% while making payment of fees. Here his total tax liability is zero since a rebate of Rs. 12,500 is available on income up to Rs. 5,00,000. Hence Ajay can make an application for lower/Non-Deduction of TDS in Form 13.
Who can make an application in Form 13?
All payees/taxpayers are eligible to file an application to the Assessing Officer(AO) to grant a certificate for Non/Lower deduction of TDS/TCS. An application can be made for the following incomes:
- Salary Income
- Dividend Income
- Interest Income
- Contactors Income
- Insurance Commission
- Brokerage or Commission
- Lottery Prize/ Commission/ Remuneration
- Rent Income
- Professional/ Technical Fees
- NRI Income u/s 195
- Compensation on acquisition of Immovable Property
- Income from units of investment fund
- Income from investment in securitization trust
When to make an application in Form 13?
The payee can make an application at any time during the financial year. However, it is a good practice to make an application at the beginning of the year for income earned throughout the year as TDS is deducted when the income arises.
Details required for filing Form 13
- Name and PAN of a taxpayer.
- TAN of the deductors.
- The Nature of payment received.
- Details of income for the last 4 years.
- Details of payment of tax for the last 4 years.
- Tax deducted/ paid for the current year.
- Projected current year’s income.
- Details of exempt income if any for the current year.
- Any assessment orders passed in last 4 years
Application Process
The Payee can make an application in Form 13 to AO in two ways: Online and Offline
Steps for Online Application:
- Login to TRACES portal
Login to the TRACES portal using PAN. If not registered then select the option of Register as New User.
- Request for Form 13
After logging in, navigate to the ‘Statements/Form’ tab and select ‘Request for Form 13’. Go through the checklist and click on proceed.
- Enter the required details.
Verify all the basic details auto-populated and select the appropriate details of state and city from dropdown. Then enter all the required details like estimated tax liability, total income, etc.
- Attach documents
Fill in the templates for estimated income and attach the supporting documents.
- Fill up Annexure
Enter TAN-wise details for section under which TDS is deducted, nature of payment, estimated amount of income and requested rate of deduction(nil or lower rate)
- Submit the Form
Once all the details are filled and supporting documents are uploaded, submit the form 13 via EVC, Mobile OTP or Digital Signature.
Offline Application:
Where online application is not accepted, an application can be made manually to the AO. You can download Form 13 from here.
Generation of Certificate
- Based on the information/details furnished in FORM 13 by the applicant, the application shall be forwarded to the jurisdictional TDS assessing officer based on state and city selected.
- After carrying out appropriate verification of information/details furnished in FORM 13, and on receipt of approval of the competent authority, the Assessing Officer would generate the certificate.
- The certificate will be system generated hence there will not be any requirement for the signature. The applicant and the deductor can download the generated certificate through their TRACES login.
FAQs
No, there is no due date to file form 13. You can file form 13 at anytime of the financial year. However it is always suggested to file one at the beginning of the financial year.
The nil/lower deduction certificate is valid for the particular financial year it is applied and granted for. But if the AO cancels the certificate before the end of financial year then it is valid till the AO cancelled the same.
The AO shall within 15-45 days grant or reject the application Form 13 for nil/lower deduction certificate.
Hey @ViraajAhuja47
TDS and TCS both come under Income Tax.
TDS: Tax Deducted at Source
TDS is a taxation method, where a person making a payment of specific nature is liable to deduct tax and deposit it with the government.
The rate at which TDS is deducted and paid is based on the specified based on nature of the payment.
The person making the payment is required to make deduct and deposit the TDS.
TCS: Tax Collected at Source
TCS is collected by the seller from the buyer at the time of sale made. Sellers selling any specified item are liable to collect tax at a predefined rate from the buyer the time of making a sale. This TCS collected has to be deposited by the seller with the government.
Hope this helps!