Time to act for lower TDS deduction: Form 15E, Form 13 for FY 2024-25 will stop after March 15, 2025; file it now

Good news for individual taxpayers including salaried as the Income Tax Department has released Form 13 which is used for applying for lower or nil rate of TDS deduction for FY 2025-26. This form can help salaried individuals to prevent excess TDS deductions and ensure that they don’t need to go through the process of claiming a tax refund later. Also Form 15E has also been enabled for filing by Indian residents who want to make payments to non-residents at a lower TDS rate.

According to an alert flash on the TRACES portal of the tax department, the functionality to file both these forms (Form 13 and 15E) have been enabled for the upcoming FY 2025-26. However, for the current FY 2024-25 these forms will be made available till March 15, 2025. This means if you want to apply for a lower TDS deduction certificate by filing Form 13 or 15E for FY 2024-25 then hurry up as only two weeks are left.

Read below to know how exactly you should file Form 13 or Form 15E so that everything is proper and the chance of its acceptance is higher.

How to file Form 13 to apply for lower or nil rate of TDS deduction?

Form 13 can only be filed if your income falls under a certain specified section. If your total tax liability for the year is lower than the TDS being deducted by your payer, you can apply for this form to avoid excess TDS deductions.

“Once you file Form 13, the Income Tax Department will issue a certificate specifying the applicable rate of TDS. This certificate can then be submitted to your payer, ensuring that only the correct amount of tax is deducted, saving you from having to claim a refund later. The Form 13 application process for the FY 2025-26 is available starting February 28, 2025,” says Chartered Accountant Abhishek Soni, co-founder, Tax2Win.

Here are the eligible incomes for Form 13:Section Eligibility to File Form 13

Source: Tax2Win

Chartered Accountant Ashish Karundia says, “Previously, lower TDS forms were not available in advance for the financial year, causing cash flow issues for the taxpayers’. However, with the early release of these forms, the government’s proactive approach supports better planning for the taxpayers.”

Important things to know about Form 13 (lower TDS deduction)

ET Wealth Online have asked various experts about some important things to know about Form 13, here’s what they said:

Once Form 13 is filed, tax officer will ask for additional information and then either lower the TDS rate, set to zero or keep unchanged

Successful filing of Form 13 is no guarantee for definite acceptance of lower TDS deduction request.

Chartered Accountant Ashish Karundia says: “Form 13 is filed by the recipient of income. It can be filed by any taxpayer, including non-resident individuals (NRIs), to request a reduced TDS (Tax Deducted at Source) rate. After the form is submitted online through the TRACES portal, the TDS officer reviews the request for a lower deduction. If the officer believes additional information or documents are needed, the taxpayer will be asked to provide them. The officer will then assess the TDS rate, which could be lowered, set to zero, or remain unchanged based on the review.”

When asked about time limit to issue such a lower or nil rate TDS certificate, Gaurav Makhijani (Head of Tax, North India and Gujarat) at Roedl & Partner India said: “To enhance efficiency in processing applications for Lower or Nil Withholding Tax (TDS) and ensure timely disposal, the Citizen Charter (S. No. 14) issued by the government of India stipulates a timeframe of one month from the end of the month in which a complete application is received. The tax department has also issued guidelines instructing Assessing Officers to adhere to this timeframe while processing applications.”

Lower or nil TDS certificate will mention the maximum income amount allowed for lower or nil rate

Once your submitted Form 13 is accepted and you get the lower or nil rate TDS deduction certificate, it will mention the maximum permissible amount of income eligible for such lower or nil deduction.

“The lower TDS certificate will mention the maximum amount of income permissible for lower deduction of tax. Say if a taxpayer wrote in Form 13 that he/she will get Rs 5 lakh income in a year but has got Rs 6 lakh then on Rs 5 lakh income the lower TDS rate will be applicable and on the balance Rs 1 lakh the usual TDS rate will be applicable,” says Karundia.

File a writ petition before High Court if AO rejects the lower or nil TDS deduction claim

“Form 13 helps to prevent excess tax deductions and ensures you don’t need to go through the process of claiming a refund later. In Form 13 the taxpayer needs to give details of the TDS deductor’s TAN and expected amount of income. Once submitted, the TDS officer will ask for more information and proof. If the officer accepts the submission then he/she will issue a lower TDS deduction certificate and it will mention the time period and maximum amount of income eligible for such lower deduction. In case the officer is not satisfied and denies a lower TDS certificate then the taxpayer can file a writ petition before the High Court,” says Mihir Tanna, associate director, S.K Patodia LLP.

What are the documents that needs to prepared for applying for lower or nil TDS certificate?

According to Makhijani, “Along with some general information and relevant forms requirements, taxpayer should be ready with details of their existing tax liabilities (outstanding for past year), estimated total income (with supporting documents) for the year in which the certificate is sought covering income details & withholding tax (TDS) data, and tax returns for the last four years. As the certificate is issued based on estimated income, the actual tax liability may differ. This certificate serves as a provisional assessment and does not constitute a final tax order for that year. Therefore, taxpayers are required to submit an indemnity, agreeing to pay any additional tax liability if the final tax amount exceeds the estimated liability. To make process easier, taxpayers should prepare a cover letter explaining their case for lower / nil withholding tax (TDS) certificate. If a taxpayer has outstanding tax liabilities, the tax officer may refuse to issue the certificate. Therefore, if there is any disputed tax liability, the taxpayer should seek a stay on the tax demand before filing the application.”

What is Form 15E and who can file it?

On the TRACES portal both Form 13 and Form 15E have been enabled for FY 2025-26. The fundamental difference between Form 13 and 15E is, Form 15E is filed by the payer and Form 13 is filed by the recipient. Form 15E helps the payer determine the amount of income subject to TDS when making a payment to a non-resident.

Soni says the taxpayer needs to file this form to ensure that tax is deducted only on the portion of the payment that is chargeable to tax, thus avoiding the deduction of tax on the non-taxable portion.

Some examples where Form 15E is required to be filed:
Soni says individuals can file Form 15E when making payments to non-residents under Section 195 to request a lower or nil TDS deduction. Common cases include:

• Purchase of Property from an NRI – When buying property from an NRI, TDS (20%-30%) applies on capital gains. Form 15E ensures TDS is deducted only on the taxable portion.
• Fees for Online Courses or Training (including training material)– Payments to foreign universities or learning platforms may attract TDS. Filing Form 15E clarifies tax applicability.

Karundia explains with an example: if Mr A, an Indian resident, hires a consultant from the UK (Mr B) for a works contract service (services and goods) worth Rs 10 lakh. Here, ideally, TDS is deducted from the total amount before payment. In such cases, the payer can file Form 15E to determine the taxable portion of the amount in India and the corresponding tax to be deducted. By filing Form 15E, the payer ensures that tax is only deducted on the taxable amount.

Makhijani,says this option of lower TDS certificate is particularly useful in few peculiar cases where it’s better to approach tax officer for such certificate.

Makhijani explains few of these situations are

1. Where taxpayer has business losses enough to offset against such proposed income leading to no / low tax;
2. In mergers and acquisitions where a foreign entity is looking to exit, Indian party is likely to apply applicable rates (e.g., 12.5% or 35% as the case may be for long-term or short term capital gains) on the total payment. In such a case, such foreign taxpayer may approach tax office with estimated tax capital gain portion on sale of shareholding (sales price less cost of acquisition and certain expenditure wholly and exclusively connected with transfer of share) which will lead to much lower tax amount on capital gain portion only vis-à-vis the total sale price;
3. Similar to this, a foreign company which has a permanent establishment in India is also subjected to tax applicable tax rate of 35% on gross payment whereas actual tax is payable on net profit. In this case also, it is recommended to get lower / nil withholding tax (TDS) certificate. This helps prevent significant tax outflows and optimizes cash flow.

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