Small taxpayers can obtain lower TDS certificate electronically

In a relief to small taxpayers, the finance minister has proposed to give them an option to file applications for obtaining lower or nil TDS certificates electronically.

A taxpayer typically applies for a lower or nil TDS certificate when their actual tax liability for the year is lower than the standard TDS rate (or nil) so that excess tax is not deducted upfront and blocked as a refund.




Presently, under Section 395 of the Income-Tax Act, small taxpayers have to approach their jurisdictional income-tax officer to file a manual application to obtain such a certificate. The process involves follow-ups, and delays. Under the proposed framework, the payee may file an application electronically before the prescribed income-tax authority, which may issue the certificate electronically, subject to the fulfillment of prescribed conditions.

Explaining the proposal, Dipesh Jain, Partner, Economic Laws Practice, said, “The amendment is a targeted compliance-relief measure introduced for small taxpayers as an alternative to the existing manual process. The change is expected to enhance ease of compliance without diluting the substantive safeguards governing grant of such certificates.” While Ameet Patel, partner at Manohar Chowdhry & Associates, welcomed the move, he said, “Going by experience, it would be interesting to see how this would work practically. How much will the applicant be able to explain through electronic means is a big question mark. Like all faceless initiatives, this too is a noble one. But whether it becomes a boon or a bane - only time will tell.”