Moment guide · FY 2026-27

I am applying for a lower TDS certificate

How do I get a lower TDS certificate under section 197?

Apply for a lower or nil TDS certificate on Form 13 through the TRACES portal before the transaction; the assessing officer issues a certificate with the rate and validity, and the payer deducts at that rate. The certificate is not retroactive, so apply early, and it is payer-specific — each payer needs its own certificate number.

The #1 trap

Applying for the certificate after the transaction — a section 197 certificate is not retroactive, so TDS already deducted at the statutory rate stays deducted and you reclaim the excess only at filing. Also, the certificate is payer-specific: a certificate issued for your salary payer does not cover your interest payer, and each payer needs its own certificate number.

Daniel, NRI with rental and interest income in India

Daniel, an NRI in Toronto, earns rent of ₹8,00,000 a year from a Mumbai flat and interest of ₹3,00,000 on an NRO fixed deposit. His tenant deducts TDS under section 195 at the NRI rate on the rent, and the bank deducts 30% on the NRO interest. Because Daniel's Indian income after the section 24(a) 30% standard deduction on rent and the basic exemption is taxed at a lower effective rate, he applies on Form 13 through the TRACES portal in March, before the April rent payment is due. The assessing officer examines his returns for the past two years and issues a certificate authorising deduction at 10% on the rent and a lower rate on the interest, valid for the financial year. Daniel gives the certificate numbers to the tenant and the bank, and both deduct at the certified rates going forward. A missed application would mean the statutory 30% TDS applies to the rent, and a certificate applied for after the April payment cannot undo the deduction — the excess would only come back as a refund at filing. The certificate is also payer-specific: the tenant's certificate number does not work for the bank, so Daniel obtains two certificates. He renews them each financial year and keeps the TRACES acknowledgements, because the payers ask for the current certificate before each deduction. A quick call with us dials in the final figure. Daniel also checks the certificate's validity period, because the AO issues it for a specified period, usually the financial year, and a payment made after the expiry is taxed at the statutory rate again. The certificate is issued only after the AO examines his past returns and estimated income, so he files his returns on time to keep the history clean. If his income rises mid-year, the certificate may be cancelled or revised, and the payer reverts to the statutory rate. The certificate is specific to the payer and the nature of the payment, so a certificate for rental income does not cover the bank interest, and vice versa. If the tenant or the bank deducts TDS at the certified rate, the amount is credited to his 26AS, and he reconciles the credits against the certificate numbers at filing. A quick call with us dials in the final figure.