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TDS certificate of nil or lower rate u/s 197 or 197A

CPC(TDS) team feels glad to constantly update our stakeholders with relevant advisory communications from time to time. This communication seeks to provide important information related to a Certificate issued for Deduction of Tax at Lower/ NIL Rates under section 197/197A of the Income Tax Act,1961.

About Certificate u/s 197/ 197A:

Assessing Officer can issue a certificate for lower or no deduction of tax:

. To the deductee, if is a resident or

. To the deductor, where the deductee is a non-resident

. If the Assessing Officer is satisfied that the t otal income of the deductee justifies deduction of tax at a lower or nil rate.

Accordingly, the clause provides that the deduction shall be made in accordance with the certificate, until such certificate is cancelled by the Assessing Officer or the expiry of the validity of the certificate, whichever is earlier.

Actions to be taken on receipt of the certificate:

. Please validate the PAN of the deductee submitting the certificate

. The Certificate should be valid for the PAN, Section and Rate which has been mentioned in the statement fiiled.

. Check that the certificate is valid for the relevant Financial Year

. Verify that the threshold limit for the certificate has not been exceeded in previous quarters.

. Correct certificate number should be quoted in the statement. Example of Correct Certificate Number - 2XXXAH7XXE

. Raise the Flag "A" in the statement for a certificate u/s 197 and Flag "B" for certificate u/s 197A.

. Please ensure that the Certificate Number is mentioned in the Deductee detail of the statement. (For F.Y.2013-14 Onwards)

. If you are in receipt of a CPC(TDS) Intimation u/s 200A/ 154 for Short Deduction, you are requested to download the Justification report. The details of the Short Deduction due to an issue with the 197/197A certificate can be checked under the TAB "Short Deduction due to 197 Certificates". You may verify the details and correct in accordance with the above guidelines.

. If a Correction Statement is being submitted, please ensure that the above has been taken care of for the Conso File downloaded from TRACES.

Please refer to our e-tutorial<https://www.tdscpc.gov.in/en/download-nsdl-conso-file-etutorial.h
tml> for any assistance with Conso File.

Caution to be exercised for the following:

. Please ensure that Flag A/B is not raised for any Invalid PAN.

. Please do not raise Flag A/ B for a PAN which does not have the above certificate.

. Avoid mentioning Section code in the "Certificate Number" field of the statement.

. Expired certificates are not to be used.

. Please check that the threshold limit has not been exceeded in the previous quarter.

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