Form 13: An application for Non-Deduction/ Lower Deduction of TDS/TCS.

By Hiral Vakil on June 27, 2019

What is Form 13?

Usually, tax is deducted at the time of making payment to the payee, and the same is claimed by the payee at the time of filing ITR as per Form 26AS. But sometimes it may happen that the total tax liability of a payee is less than TDS deducted on his income and he does not wish to wait till the end of the year to claim refund of tax deducted. In this cases, under section 197 payee can make an application for Non Deduction/ Lower Deduction of tax in Form 13 to his Assessing Officer (AO).

Let’s take an example to understand better: Mr. Ajay is a freelancer professional and has earned income from project with a company and the fees paid by the company is Rs. 5,00,000. During the FY 2017-18 he has not earned any other income. The Company will deduct TDS at the rate of 10% while making payment of fees. But ajay had incurred business losses on previous year of Rs. 3,50,000 which needs to be set off against this years income. In this case, he can make an application for lower/Non Deduction of TDS in Form 13 since his total tax liability for a year is less than Rs. 50,000 (10% of Rs. 5,00,000) TDS deductible. Ajay’s total tax liability for a year is nil since his total income for a year after set off of losses is less than Rs. 2,50,000.

This application needs to be made for each financial year separately to the AO and certificate number needs to be given to the deductor for lower deduction/ Non Deduction of TDS/ TCS.     

Who can make an application in Form 13?

In order to decrease burden on payee, the government has inserted section 197 which states that a person whose total tax liability at the end of the year is less than TDS deducted, taxpayer can file an application to the Assessing Officer(AO) to give a certificate for Non/Lower deduction of TDS/TCS.

As per section 197, application can be made in Form 13 if TDS is deducted on any of 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

Note:  In case of interest income, if any interest on FD or interest on other than interest on securities is received then Form 15G/ 15H are applicable.

When to make an application in Form 13?

An application can be made in Form 13 at any time during the financial year. However, it is a good practice to make an application in the beginning of the year for income earned throughout the year.   

What are the details required for filing Form 13?

Following are the details required for furnishing Form 13:

  • ​Name and PAN of taxpayer.
  • Details about the purpose for which the payment is being received.
  • Details of income of the last 3 years.
  • Details of payment of tax of the last 3 years.
  • Details of tax deducted/ paid for the current year.
  • Projected current year’s income.
  • Details of exempt income if any for the current year.

How to make an application in Form 13?

Payee can make an application in Form 13 to AO in following manner:

  • An application can be made online by payee whose AO is situated in regions of Mumbai, Tamil Nadu and Karnataka. It is advised that payee/ taxpayer files complete and correct details required for processing the application. Once application is processed and AO is satisfied with the application he will issue the certificate. This Certificate is only valid for the specified deductors and hence only those deductors can deduct tax at lower rate and not all the deductors.
  • An application can be made manually to the AO in all other regions where online application is not accepted.You can download the form 13 from here.
  • Once the certificate is issued, TDS/TCS should be deducted at the rate specified in the certificate and not as per the applicable section.