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Amendment in Rule 28AA-The certificate for TDS/TCS deduction at lower rate u/s 197(1) now could be a general one and to be issued to the applicant directly

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Under section 197(1) of the Income Tax Act, 1961, a person who is in receipt of any income on which tax is required to be deducted at source at the rates prescribed under the provisions of sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194K, 194LA and 195, can make an application in Form No. 13 to the Income Tax Assessing Officer for issue of a certificate for deduction of TDS at rates lower than prescribed.

If the Assessing Officer is satisfied that existing and estimated tax liability on the total income of the applicant justifies the deduction at lower rates or at no deduction at all, he/she may issue such certificate.

When the recipient furnishes such certificate to the person responsible for paying the income, the payer, until the certificate is revoked/cancelled by the Assessing Officer, shall deduct tax as per rates / deduct no tax as specified in the certificate.

Rule 28AA of the Income tax Rules, 1962, prescribes the rules to be observed in this regard. Sub Rule (2) provides that the existing and estimated tax liability shall be determined by the Assessing officer after taking into the consideration, the following:

1. tax payable on estimated income of the previous year relevant to the assessment year
2. tax payable on the assessed or returned income, as the case may be, of the last three previous years.
3. existing liability under Income Tax Act, 1961 and Wealth tax Act, 1957
4. advance tax payment for the assessment year relevant to the previous year till the date of the making application.
5. tax deducted at source/tax collected at source for the assessment year relevant to the previous year till the date of the making application.

The certificate can be issued for part of or complete previous year. Sub Rule (3) provides that the certificate issued by the Assessing Officer shall be valid for such period of the previous year as specified unless cancelled before the expiry of such period.

Amendment in Rule 28AA made by Notification 46/2014 dated 24-09-2014

Sub rule (4) and (5) of Rule 28AA has been substituted and new sub rule (6) has been added as under

Rule

Before amendment

After amendment

28AA(4)

The certificate shall be valid only with regard to the person responsible for deduction of tax named therein.

The certificate for no deduction of tax shall be valid only with regard to the person responsible for deducting the tax and named therein.

28AA(5)

The certificate shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.

The certificate referred to in sub-rule (4) shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.

28AA(6)

 

-

The certificate for deduction of tax at lower rate shall be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after deduction of tax at lower rate


Implications of the amendments:

The certificate for lower deduction could now be a general one, issued to the applicant directly. The previous requirement of issue to and naming the person responsible in the certificate has now been restricted only to certificate for no or nil-deduction of tax. Form 13 has also been amended accordingly.

Download the Notification No 46/2014 Click Here >>

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