I-T Act: An explainer on Section 197
What's the story
Decoding the complex web of the Income Tax Act is crucial for Indian taxpayers. Section 197 provides the option to apply for a certificate for lower or nil TDS on your income. Read on to learn how to get a Section 197 certificate and take control of your tax deductions.
Eligibility
Eligibility criteria explained
To be eligible for a Section 197 certificate, applicants must have a valid reason to believe their total income warrants a lower deduction rate. Reasons can include losses carried forward from previous years and deductible investments under the Income Tax Act. It is important for applicants to keep their documents in order and make accurate estimations of their income and deductions while applying.
Application
Application process simplified
The application for Section 197 certificate has to be made online through the Income Tax Department's e-filing portal. Applicants are required to fill Form 13 and attach necessary documents that support their claim for lower deduction. This process also requires you to give detailed estimates of income from different sources, anticipated tax liabilities, and details of taxes already paid during the fiscal year.
TDS rates
Understanding TDS rates under section 197
Once approved, the Income Tax Department grants a certificate specifying the rate at which TDS should be deducted. These rates are determined according to the information provided by the applicant in Form 13. In some cases, where the assessee's estimated total income warrants, a certificate for nil deduction of tax at source may be issued.
Compliance
Compliance and renewal requirements
Certificate holders should intimate all income payers about it immediately. In case of any change in financial conditions, the department should be notified right away. Failure to do so can result in certificate cancellation and penalties. Certificates are valid for one financial year, and you need to renew it with your updated finances to continue enjoying the lower deduction.