Application for the NIL / Lower TDS Deduction Certificate for FY 2020-21 may be made from 28 February 2020.

Under the provisions of the Income Tax Act, deduction of tax deducted at Sources (TDS) is mandatory while making payments. The taxpayer making the payment must deduct the TDS and deposit it to the Department of Income Tax before the assigned due date for depositing the TDS.

At times, the TDS is deducted from the total income of the taxpayer, i.e. the recipient, whereas the total tax liability of the taxpayer is calculated on the profit of that financial year. It is in accordance with the prevailing income tax rates/rules which may be less than the total amount of the TDS deducted.

In those cases, TDS will be deducted first, and the taxpayer can claim the refund of the excess amount of TDS deducted while filing the return on income tax (ITR). But the whole process turns out to be a hassle for many taxpayers because firstly TDS is deducted and later on the taxpayer asks for its refunds by filing ITR.

To make it easy, 

Section 197 has been issued by the government which allows taxpayers to use the Nil / Lower  Deduction of the TDS Certificate. But often the process of obtaining the Nil / Lower Deduction TDS Certificate takes a lot more time than expected.

To address this issue, the Government is allowing taxpayers to apply for the Nil / Lower TDS Deduction Certificate for the financial year 2020-21 from 28 February 2020.

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