TDS- LESS TDS-WHAT IS FORM-13-HOW TO SUBMIT FORM 13

How to Submit Form 13 ?

As per the Income Tax Act 1961, Tax needs to be deducted at source (TDS) at the time of making any payment. The TDS deducted needs to be paid to the Government within the due date and TDS returns need to be filed.

The income tax department has introduced Section 197 to allow taxpayers to apply Lower deduction/collection of TDS/TCS or Nil deduction/collection of TDS/TCS

This document covers

1. Why Form 13 – Reasons?

Reasons for introduction of Lower or Nil deduction/collection of TDS/TCS

In certain circumstances,

1. The TDS will be deducted from the income of the receiver but the total tax liability at the end of the year is less and the deductees need to wait for a long time to claim the refund of tax deducted at source.
2. In the case of the sale of property by NRI, the buyers need to deduct TDS on sale value instead of capital gains.
3. In case of NRI’s earning rental income or interest income, the payer needs to deduct TDS @30% irrespective of the slab rate of NRI’s.

To avoid the above hardships faced by the taxpayers, the Income tax department has introduced section 197 under the Income Tax Act 1961. Section 197 allows the taxpayers to apply for Lower deduction/collection of TDS/TCS or Nil deduction/collection of TDS/TCS

2. What is Form 13?

Form 13 is the application to apply for Lower deduction/collection of TDS/TCS or Nil deduction/collection of TDS/TCS. Form 13 needs to be filed only on the Traces website. Once form 13 is submitted In the Traces portal, it will be forwarded to the Jurisdictional Assessing officer for approval.

3. Who can file Form 13?

Form 13 can be filed by Residents, Non-Residents (NRI), and Resident but not ordinarily resident(RNOR). The taxpayer needs to submit his residential status while submitting Form 13 in Traces.

4. What are the Required details for Form 13

Following are the required details for Form 13

1. PAN of the applicant
2. Residential Status of the Applicant
3. District and State of the applicant
4. TAN of the person who is responsible for deducting TDS (Example: Buyer TAN in case of sale of property by NRI)
5. Nature of Receipt (Rent, Capital Gains, commission, etc)
6. Estimated income to be received from the transaction.
7. Requested rate of tax deduction if known
8. Estimated income and TDS for the current financial year.
9. Copy of ITRs for last 4 years preceding the current financial year or income and Tax details for the last 4 years

NOTE: However, in case of the sale of property by NRI, the below details can be asked by the Assessing officer subject to verification of details. Hence it is recommended to have the below details also

1. Copy of proposed Sale agreement.
2. Guideline value of the property as on date, for land and building
3. Copy of Passport if you are an NRI
4. Proof of Cost of Improvements if claimed any
5. Copy of construction agreement /Purchase deed
6. Copy of Bank Statement

5. Steps for filing Form 13 post registration on TRACES

1. Login to Traces
2. Go to Statements/Forms and click on request for Form 13
3. Select the residential Status.
4. Select the request type as original select the applicable financial year and select the application type as online.
5. Basic details of the authorized person registered on the TRACES portal shall be auto-populated and enter the state and district.
6. Enter the responsible TAN, Nature of receipt, and required rate of TDS/TCS deduction.
7. Upload the Income and Tax liability of the current year and the last 4 years and e-verify either through aad-haar otp/mobile number registered with traces/net banking/Digital signature

6. Post submission of Form 13

Form 13 will be submitted to the jurisdictional assessing officer and the jurisdictional assessing officer will be decided on the basis of state and district provided by the applicant in Form 13

1. The AO reviews the details and documents and asks for clarifications, if any;
2. Post AO approval, the application is forwarded to Addl CIT for his approval;
3. Post approval by Addnl CIT, the application is sent to CIT for review and final approval
4. Post approval by CIT, the application is successfully completed and the process for generation of lower withholding certificated is initiated;
5. Once Lower Withholding certificate is generated, the same can be downloaded from TRACES portal.

7. Validity of Certificate

The Lower Deduction/Nil deduction certificate received is valid from the date of issue to the end of the financial year unless the Assessing officer cancels before the financial year

8. Due Date for Filing Form 13

The due date for filing Form 13 is March 15 every financial year. For FY 2022-23, the due date for filing Form 13 is March 15 2023 if the seller wants to complete the transaction in FY 2022-23