Claim lower/nil TDS deduction- Form 15G, Form 15H and Form 13

As per the provisions of Income tax, TDS/TCS is required to be deducted/ collected at the time of making payment. However, sometimes what happens is that your estimated final tax payable is lower than the TDS/TCS being deducted/collected which results in paying taxes higher and then claiming refund. So, is there something that can be done to avoid this?  Is it possible to get tax deducted at lower/nil rate? Answer to these questions is yes! It is possible to get your tax deducted at lower rates.

Whenever a person is of opinion that his income does not require deduction of tax at normal rates, he may apply to assessing officer in Form 13 for a certificate of deduction of tax at lower/nil rate. Tax payers seeking non-deduction of tax from certain incomes like Interest on Securities or Interest on Fixed Deposits  are required to file a self-declaration in Form 15G or Form 15H as per the provisions of Section 197A of the Income tax Act. 

What is the procedure for lower/nil tax deduction certificate?

Following are the steps in claiming lower/nil rate of tax deductions:

1. Prepare estimated financial statements and compute estimated total income
2. Calculate expected tax payable on estimated total income considering any tax paid, TDS/TCS, etc. upto the date and estimated tax payable or TDS/TCS, etc.
3. Based on this identify if there is tax payable or refundable.
4. In case there is any expected tax refund or lower tax payable during the year, then assesse should apply for lower/nil deduction tax rate certificate instead of blocking funds for a period of 2-3 years.
5. After submitting application in Form 13 to the TDS department, Assessing Officer will review your documents and may ask for further documents and queries, if any so as to satisfy himself that the person can claim lower/nil tax deduction.
6. TAN of all parties, must be provided correctly, for whom lower/nil tax rate deduction has to be availed because nowadays department is issuing only system generated certificate based on TAN.
7. Once the certificate is granted, it has to be submitted to the person who is deducting TDS in all cases except where payment is being made as Interest on securities or Interest on Fixed deposits.

Read Also: TDS on various commission and Brokerages under Income Tax

What all documents are required to be submitted for Nil TDS Certificate?

1. Covering letter describing details of business, reasons for lower TDS certificate, TAN of other parties, etc.
2. Form no. 13
3. Estimated financials and computation of Total income
4. In case of assessee having business or profession income, Audited financials and Tax audit report of last 3 years.
5. Income tax return acknowledgement for last 3 years
6. Copy of application and certificate obtained for earlier years
7. Any other documents depending on nature of income

Read Also: TDS on Salary : How to calculate TDS on salary as per section 192 of Income Tax

What details are required in Form No. 13?

• It requires basic details to be filled such as name, status, residential status, PAN, email id, mobile no. etc. 

• Further, details of existing liability under Income tax has to be shown year wise along with estimated total income, payment of advance tax, TDS/TCS, estimated tax liability, etc.

• If entity is claiming any exemptions under sections 10, 11, 12, then registration and exemption certificate has also to be uploaded.
• It has to signed, dated and name of place and address.
• This form is followed by 3 annexures of which Annexure 1 and 2 requires details of income/amount for which certificate is sought in case of TDS and Annexure 3 requires details of amount payable for which certificate is sought in case of TCS.

• Application has to be made at the beginning of the year and here it can be made by any person unlike form 15G/15H.
• It shall be valid for the financial year for which it is obtained. However, for financial year 2019-2020, it shall be valid upto 30^th June, 2020.

Read Also: TDS and TCS Rates Chart – Examples of how to calculate TDS for FY 2020-21

Form 15G and Form 15H

• These forms have to be submitted to Banks to make sure that no TDS is deducted on Interest, EPF withdrawal, income from corporate bonds, post office deposits, rent and Insurance commission provided that tax calculated in total income is nil and total interest income is less than the basic exemption limit for the financial year.
• These forms can be used by anyone but not a Company/Firm and has to be submitted for every year at the beginning of Financial year.
• Form 15H is used by senior citizens i.e. 60 years of age and above whereas form 15G is used by any other person except Company/Firm.
• For the FY 2019-2020, this form shall be valid upto 30^th June,2020.
• In case, income is clubbed to any other person income, then form 15G cannot be submitted.
• Filing form 15G and Form 15H requires details such as name of assessee, PAN, status, residential status, email id, telephone no., assessable to tax in any of preceding 6 years, estimated income for which declaration is made, estimated total income, signature, etc.

Read Also: TDS on Rent in Income Tax – Section 194-I & Section 194-IB

For any questions, you may reach us at Discussion Forum

The author of the above article is CA Rahul Gaur.

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