Lower / Nil TDS Certificate (Form 13)

Apply for a Lower/Nil TDS Certificate (Form 13) under Section 197 to receive payment of interest, dividend, or royalty with reduced or nil TDS. Submit Form 13 application on TRACES portal with proof of low/nil income.

Who needs this: Taxpayers whose TDS is higher than their final tax (NRIs, contractors, low-margin businesses).

Government portal: https://www.incometax.gov.in (TRACES portal)

Indicative fees: Free. No fee for Form 13 Certificate application.

Timeline: Application to approval: 10-15 working days. Certificate validity: Full financial year (April-March).

Who can use this

Individuals with income below taxable limit
Senior citizens (age 60+) with qualifying income
Entities with tax losses or low income
HUFs with low/no taxable income
Trusts with specific income criteria
Entities claiming exemptions under IT Act

Who cannot use this

Entities with outstanding tax demand
Non-compliant taxpayers
Entities with recent assessment defects

Documents required

PAN and Aadhaar card copy
Previous year ITR (last filed return)
Proof of current year income (interest certificates from bank, dividend statements, etc.)
Bank statements (last 3-6 months)
Proof of exemptions or deductions (if applicable)
Deductor's details (TAN, name, payment/interest details)

Step-by-step process

Log in to TRACES portal with your PAN — Visit https://www.incometax.gov.in and select 'TRACES' link. Log in using your PAN as username and registered mobile OTP for authentication.
Navigate to Form 13 Certificate application — After login, click on 'e-Services' or 'Forms' > 'Section 197 (Lower Deduction Certificate)'. Click 'Apply for Form 13'.
Select certificate type: Lower or Nil TDS — Choose whether you want Lower TDS Certificate (reduced rate) or Nil TDS Certificate (0% TDS). Based on your expected income, select appropriate option.
Enter source of income and expected amount — Specify the source: Bank Interest, Dividend, Royalty, etc. Enter estimated amount you will receive in current financial year. Provide deductor's TAN and name.
Provide justification for lower/nil TDS claim — Explain why you are claiming lower/nil TDS: income below taxable limit, age 60+, losses from other sources, exemptions under IT Act, etc. Upload supporting documents.
Upload ITR and income proof documents — Upload your last filed ITR, current year income documents (bank interest certificates, dividend statements), bank statements, and any exemption certificates.
Fill applicant personal details — Enter your name, PAN, Aadhaar, DOB, address, phone, and email. Verify details match your PAN records.
Calculate and declare proposed TDS rate — Based on income and deductions, calculate the TDS rate you are seeking: 0% (nil), 5%, 10%, etc. Justify the rate with reference to IT Act provisions.
Provide deductor's details and contact — Enter deductor information: Name, TAN, address. Mention if deductor is a bank, company, or fund house. The certificate will be sent to deductor as well.
Review application summary — TRACES displays a summary of your Form 13 application: income source, amount, justification, documents, and proposed TDS rate. Verify all details are correct.
Submit Form 13 application — Click 'Submit'. You will receive an application reference number via email. TRACES will send application to Income Tax Officer for processing.
Income Tax Officer reviews and approves — The assessing officer will review your application within 10-15 days. If additional documents are needed, you will receive notice on TRACES portal.
Receive Form 13 Certificate approval — Once approved, the Form 13 Certificate is issued electronically. You will receive it on TRACES portal and via email with the approved TDS rate.
Download and share certificate with deductor — Download the Form 13 Certificate PDF. Share it with the deductor (bank, company, etc.) before payment of interest/dividend to claim lower/nil TDS benefit.
Deductor applies reduced TDS on payment — Once deductor receives Form 13, they will apply the approved TDS rate (lower or nil) on your interest/dividend payment instead of standard rate. Payment credited with lower TDS.

What it is for

Where TDS at the ordinary rate would exceed your actual tax liability, an application under section 197 allows the assessing officer to authorise deduction at a lower rate, or at nil. It matters most for businesses on thin margins and for non-residents, where deduction on gross receipts can far exceed the tax on the income actually earned — locking up working capital until a refund arrives many months later.

Apply in Form 13, and apply early

The application is made electronically in Form 13 on the TRACES portal. A certificate operates prospectively, so deductions already made at the full rate are not undone by it and must be recovered as a refund at filing. Applications for a financial year are typically made near its beginning; applying in the third quarter salvages only what remains of the year.

What the officer actually looks at

Expect to substantiate the projected income and tax for the year, past returns and assessments, existing TDS credits, any outstanding demand, and the basis of the estimate. A pending demand or unfiled returns will usually stop the application. The stronger the documentary support for the projection, the more likely a rate close to the real liability is granted.

The certificate is specific, and its limits bind you

A certificate is issued for named deductors, for specified sections, for a stated rate, up to a specified amount and for a defined period. It is not a general licence. Once the threshold amount is exhausted, deduction reverts to the ordinary rate, and a deductor not named on the certificate cannot rely on it. Circulate the certificate to each listed payer promptly, since they must quote it in their TDS returns.

The alternative for small taxpayers

Where total income is below the taxable limit, Form 121 is a self-declaration made to the payer, most commonly a bank, and requires no application to the department. It replaced Forms 15G and 15H from 1 April 2026 and applies to residents of any age. It is not available where income is in fact taxable, and a false declaration has consequences. Section 197 is the route where income is taxable but the deduction rate overshoots the liability. The TDS return filing service covers the deductor's side.

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