SECTION 197 OF THE INCOME – TAX ACT, 1961 – DEDUCTION OF TAX AT SOURCE – CERTIFICATE FOR DEDUCTION AT LOWER RATE – ISSUE OF CERTIFICATE OF LOWER DEDUCTION OR NON-DEDUCTION OF TAX AT SOURCE (TDS/TCS) UNDER SECTION 197 OF THE INCOME-TAX ACT AND CERTIFICATE FOR LOWER COLLECTION OF INCOME-TAX UNDER SECTION 206C(9)

INSTRUCTION NO. 6/2010, DATED 9-8-2010

I am directed to state that by instruction No. 8/2006 dated 13-10-2006, it was laid down that certificates for lower deduction or nil deduction of tax at source under section 197 are not to be issued indiscriminately and for issue of each certificate, prior administrative approval of the concerned Range Head shall be obtained by the Assessing Officer. Subsequently, Instruction No. 7/2009 dated 23-12-2009 read with letter F. No. 275/23/2007-IT(B) dated 8-2-2010 has laid down monetary limits for prior administrative approval of the CIT(TDS) or DIT-Intl. Taxation as the case may be. Similar conditions were laid down for certificate for lower collection of tax under section 206C(9) by Instruction No. 4/2010 dated 21-7-2010.

2. It has come to notice that such certificates under section 197/206C(9) are normally being issued at present, manually rather than through the TDS module of ITD application. To maintain centralized data of issue of such certificates and facilitate better processing of the TDS/TCS returns filed by the deductors and in continuation to the above instructions, I am directed to communicate that henceforth the certificates under section 197/206C(9) shall be generated and issued by the Assessing Officer mandatorily through ITD system only.

3. The matter of issue of certificate under section 197/206C(9) through the ITD system along with process flow and screenshots is given in TDS/TCS Instructions Nos. 36 dated 15-7-2009, 38 dated 15-2-2010 and 39 dated 28-6-2010 issued by the DIT (System).

4. The content of the above instruction may be brought to the notice of all officers working in your charge for strict compliance.