Saturday 27 August 2016

Master Circular – Collection of Direct Taxes - OLTAS

                                   
                                                         RESERVE BANK OF INDIA
                                                            ___________________
                                                                 www.rbi.org.in                                                                                                                                          RBI/2016-17/47
                                                           DGBA.GAD.No.458/42.01.034/2016-17
                                                                August 25, 2016
To All agency Banks
 Dear Sir / Madam

Master Circular – Collection of Direct Taxes - OLTAS

Please refer to our Master Circular DGBA.GAD.No.3/42.01.034/2015-16 dated July 1, 2015 on the above subject. 2. Instructions regarding Online Tax Accounting System (OLTAS) and operational aspects of the Direct Tax collection are currently being issued to agency banks directly by various agencies. In view of this, it has been decided to withdraw from the date of this circular the Reserve Bank’s existing instructions on operational aspects of OLTAS and the Master Circular on the subject.

Yours faithfully
(Partha Choudhuri)
General Manager







8 Department of Government & Bank Accounts,
Central Office, Opp. Mumbai Central Railway Station,
4th Floor, Byculla, Mumbai 400 008
Telephone: (022) 2308 4121,
 Fax No. (022) 2300 0370/2301 6072/2301 0095,
 e-mail: pcgmdgbaco@rbi.org.in 

Saturday 20 August 2016

Tax on Unaccounted Income Now Payable in Cash as Well

Those disclosing unaccounted wealth under the income declaration scheme (IDS) will have the option of paying the tax on such income in cash, the income-tax department has clarified through a fifth set of frequently asked questions (FAQs).
The I-T department has also said tax authorities will not question the valuation reports of the accredited valuers, clearing more doubts about the four-month long scheme that closes on September 30. The government has requested the Reserve Bank of India to issue instructions to banks to allow over the counter payment of tax under the scheme in cash. “It is clarified that no adverse action shall be taken against the declarant by Financial Intelligence Unit (FIU) or the I-T department solely on the basis of the information regarding cash deposit made consequent to the declaration under the scheme,“ the department has said.
The declaration will attract a total tax of 45%, including surcharge and penalty. Valuation report from a registered valuer will not be questioned by tax officials. “In case of any misrepresentation, appropriate action as per law shall be taken against the registered valuer,“ the department said, dismissing doubts on this count. The department has said income declared under the scheme for a particular assessment year can be taken into account to explain the transactions in the subsequent assessment years, helping assesses avoid multiple taxes on the same income once the declaration is made. However, a nexus between the income declared and the transactions of the subsequent assessment year will have to be established.
 The department has also relaxed the rules for the purpose of levy of capital gains tax when the asset declared is sold. The entire holding period will be considered to decide if short-term or long-term capital gains tax will be levied. Under the rules, the fair market value as on June 1, 2016 is taxed under IDS and the same will be considered as cost of acquisition at the time of future sale of concerned asset.
Under the earlier rule, period of holding was to be considered from June 1, 2016. However, indexation benefits to account for inflation will only be available from June 1, 2016. A trust or institution registered under section 12A of the Income Tax Act will not lose its registration under section 12A of the Income Tax Act, solely on the basis of the information furnished in the declaration filed under the scheme, the department has said. Under section 12A, income of institutions such as NGOs is exempted from tax. In cases where fictitious loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance, these can also be declared under the scheme even if they are not linked to investment in any specific asset. “However, in cases where there is a direct link between the fictitious liability and the asset acquired then the amount to be declared shall be the fair market value of the acquired asset as on June1, 2016,” the department said.


 (Economic Times)

CBDT issues fifth set of FAQs on IDS

                                                       Government of India
                                                         Ministry of Finance
                                                    Department of Revenue
                                                  Central Board of Direct Taxes

                                                    PRESS RELEASE
                                                 New Delhi, 18th August, 2016

 Subject : The Income Declaration Scheme 2016- Rule amendment and issuance of FAQ

The Income Declaration Scheme, 2016 (the Scheme) provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income and assets. Income Declaration Scheme Rules, 2016 (the Rules) were notified on 19.5.2016. Representations have been received from various stakeholders to provide an option to value the immoveable property on the basis of the registered value. After due consideration of the representations, the Rules have been amended to provide that where acquisition of an immovable property is evidenced by a registered deed, an option shall be available with the declarant to declare the fair market value of such property by applying the cost inflation index to stamp duty value of the property. Further, the fifth set of Frequently Asked Questions (FAQs) providing clarification on various issues under the Scheme has been issued and is available on the official website of the Income Tax Department i.e., www.incometaxindia.gov.in. Some of the important issues clarified therein are as under: (i) Where loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance sheet but are fictitious in nature and cannot be directly linked to acquisition of a particular asset, then such fictitious liabilities can be disclosed under the Scheme as such without linking the same with the investment in any specific asset. (ii) The income declared under the Scheme for an earlier assessment year can be taken into account to explain the related transactions of the subsequent assessment years in assessment proceedings pending before the Assessing Officer provided there is a nexus between the two. (iii) No adverse action shall be taken against the declarant by FIU or the income-tax department solely on the basis of cash deposits made in banks consequent to the declaration made under the Scheme. (iv) The period of holding of assets declared under the Scheme shall be taken on the basis of the actual date of acquisition of such asset and not from 1.6.2016 as clarified earlier. (v) 

(Meenakshi J Goswami)
Commissioner of Income Tax (Media and Technical Policy)
Official Spokesperson,


                                                               CBDT. 1 Circular No.29 of 2016
                                                                   F.No.142/8/2016-TPL
                                                                   Government of India
                                                                    Ministry of Finance
                                                                  Department of Revenue
                                                                Central Board of Direct Taxes
                                                                          (TPL Division)

                                                                                             *** Dated 18th day of August, 2016
Clarifications on the Income Declaration Scheme, 2016 The Income Declaration Scheme, 2016 (hereinafter referred to as ‘the Scheme’) came into effect on 1st June, 2016.

To address doubts and concerns raised by the stakeholders, the Board has issued three sets of FAQs vide Circular Nos. 17, 24, 25 & 27 of 2016. In order to address further queries received from the public relating to the Scheme, following clarifications are issued.-

Question No.1: In certain cases, the undisclosed income might be reflected in creditors or other liability which may be fictitious. Whether in such cases, the assessee can disclose only such fictitious liability as it may not be possible to link it to any specific asset or investment?
 Answer: In a situation where loans, creditors, advances received, share capital, payables etc. are disclosed in the audited balance sheet but are fictitious in nature, and such liabilities cannot be directly linked to acquisition of a particular asset in the balance sheet, then such fictitious liabilities can be disclosed under the Scheme as such without linking the same with the investment in any specific asset. However, in cases where there is a direct link between the fictitious liability and the asset acquired then the amount to be declared shall be the fair market value of the acquired asset as on 01.06.2016.

Question No.2: Whether the amount declared under the Scheme for an earlier assessment year can be taken into account to explain the transaction(s) in the assessment proceedings for subsequent assessment year(s)?
 Answer: As per section 189 of the Finance Act, 2016, any declaration made under the Scheme shall not affect finality of completed assessments. However, in an assessment proceeding before the Assessing Officer for an assessment year subsequent to the year for which the income is declared under the Scheme, the income declared for an earlier 2 assessment year can be taken into account to explain the transactions provided there is a nexus between the income declared and the transactions of the subsequent assessment year.

Question No.3: Whether the valuation report of assets declared under the Scheme shall be called for by the department for any enquiry at any time?
Answer: The valuation report from a registered valuer shall not be questioned by the department. However, the valuer is expected to furnish a true and correct valuation report in accordance with the accepted principles of valuation. In case of any misrepresentation, appropriate action as per law shall be taken against the registered valuer.

 Question No.4: Though the fair market value as on 1st June, 2016 is taxed under IDS, and such amount will be treated as cost of acquisition at the time of future sale of concerned asset, whether such treatment shall affect the character of the asset as long term or short term?
 Answer: The issue was earlier considered and it was clarified vide Circular No.17 dated 20.05.2016 that in such cases period of holding shall be deemed to begin from 01.06.2016 as the asset has been revalued on such date. However, considering the representation received from various stakeholders and the fact that this may lead to complications in calculation of capital gain at the time of sale of asset which was partly funded from undisclosed income now declared under the Scheme, the matter has been reconsidered. Accordingly, in supersession to the earlier clarification as referred above, it is clarified that the period of holding of asset declared under the Scheme shall be based on the actual date of acquisition of such asset. However, the indexation benefit in respect of the amount declared under the Scheme shall be available from 01.06.2016 only. The said situation is illustrated as below:- Suppose Mr. ‘A’ purchased a house on 01.10.2011 for Rs.10 lakh and declares fair market value of the same as on 01.06.2016 under the Scheme at Rs.20 lakh. If the said house is sold on 01.10.2017 for Rs.30 lakh, the holding period for the house for purposes of computation of capital gain shall be six years i.e. from 01.10.2011 to 01.10.2017. As the holding period exceeds three years, the gains arising from such transfer shall be treated as long term capital gain. Further, the indexation benefit in this case shall be available on Rs.20 lakh from 01.06.2016 to 01.10.2017. 3

Question No.5: What will be the value of immovable property to be declared under the Scheme in a case where the cost of immovable property is only partly evidenced by a registered deed and partly otherwise?
Answer: In such a case, the option of calculating the fair market value of the immovable property based on applying the cost inflation index to stamp duty value shall be available only in respect of that part of the property the cost of which is evidenced by a registered deed. With regard to the remaining part the fair market value of the property shall be determined based on the provisions of rule 3(1)(d) of the Rules without taking into effect the proviso to the said rule. The said situation is illustrated as below:- Suppose, Mr. ‘X’ purchased a piece of land in year 2004-05 for Rs.10 lakh, however the stamp duty value was Rs.15 lakh. Thereafter, in the period 2005-06 to 2007-08, Mr. ‘X’ constructed a two storeyed house on the said land. The amount to be declared in respect of the said property shall be (A + B) where A= Value of land (if the assessee opts for valuation on the basis of indexation) shall be Rs.15 lakh x cost inflation index of 2016-17 cost inflation index of 2004-05 B= Fair market value of the house (excluding value of the land) as on 01.06.2016 as determined by the registered valuer or the cost of construction whichever is higher.

 Question No.6: A declarant has already filed a declaration under the Scheme determining the value of immovable property on the basis of Income Declaration Scheme Rules, 2016 prior to their amendment vide the Income Declaration Scheme (Third Amendment) Rule notified vide CBDT Notification No. 74 dated 17.8.2016. In such a case whether the declarant can revise the declaration based on such amended rules?
Answer: Yes, the declarant can revise the fair market value of immovable property declared in the declaration already filed on account of the amended provisions of the Income Declaration Scheme Rules, 2016 even in a case where such revision may result in downward revision of the declared amount in respect of the immovable property.

Question No.7: Whether the payment of amount payable under the Scheme can be made in cash to the Banks? Further, whether the amount disclosed under the Scheme can be deposited in the bank account in cash?
Answer: Reserve Bank of India (RBI) has been requested to issue instructions to banks to allow payment of tax under the Scheme in cash. RBI has also been requested to instruct the banks to allow deposit of cash over the counter in accordance with its existing master circular No. DBOD No.Leg.BC.21/09.07.006/2014-15 dated 01.07.2014.

 Question No.8: Whether the information of cash deposits made in bank as a consequent to declaration made under the Scheme shall be picked up by FIU or reported to the income-tax department?
 Answer: It is clarified that no adverse action shall be taken against the declarant by FIU or the income-tax department solely on the basis of the information regarding cash deposit made consequent to the declaration under the Scheme.

Question No.9: In case a trust or institution registered under section 12A of the Income-tax Act files declaration under the Scheme, whether the registration under section 12A shall be cancelled on the basis of such declaration?
Answer: No, the registration under section 12A of the Income-tax Act shall not be cancelled solely on the basis of the information furnished in the declaration filed under the Scheme.

Question No.10: Where a person has claimed weighted deduction, say 175%, on account of making bogus donation then what should be the amount of declaration under the Scheme?
Answer: The declarant has to declare the amount of weighted deduction claimed in respect of bogus donation i.e. 175% of the bogus donation in this case.

Question No.11: In a case where the return of income has not been filed for an assessment year but the time limit for filing the same has not expired under section 139 of the Income-tax Act, whether the declaration under the Scheme can be filed for such assessment year?
Answer: The declaration for the assessment year for which the return of income has not been filed can be made under the Scheme even though the time limit for filing the return under section 139 of the Income-tax Act has not expired. 5 Question No.12: In answer (b) to question No.6 of Circular No.17 of 2016 dated 20.05.2016, it has been stated that “person is barred from making a declaration under the Scheme in respect of an undisclosed income in which the survey was conducted”. Please clarify? Answer: The clause (b) of answer 6 may be read as “In case of survey operation, the person is barred for making a declaration under the Scheme in respect of the previous year in which the survey was conducted. The person is, however, eligible to make declaration in respect of an undisclosed income of any other previous year”.

 (Abhishek Gautam) Under Secretary to the Government of India Copy to:-
1. PS to FM/ OSD to FM/ OSD to MoS(R).
2. PS to Secretary (Revenue).
 3. The Chairperson, Members and all other officers in CBDT of the rank of Under Secretary and above.
4. All Pr. Chief Commissioners/ Pr. Director General of Income-tax – with a request to circulate amongst all officers in their regions/ charges.
5. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn.)/ Pr. DG (NADT)/ Pr. DGIT (L&R). 6. CIT (M&TP), CBDT. 7. Web manager for posting on the departmental website.

Thursday 18 August 2016

Provisions Relating To Refunds under Punjab Vat Act 2005




Administration of any tax law refund of tax to the assessee is as much importance as ensuring tax payment from the assessee. Refund in tax laws whether (indirect or direct) arises primarily due to the reason of excess tax paid than actual due, secondary reasons may be like refund arising out of a judgment of a court or an order of an authority.


Here in this article refund provisions under Punjab VAT Act 2005 are concentrated on:-

When Refund may arise under Punjab VAT Act 2005: Refund under Punjab VAT Act 2005 may arise due to many reasons. VAT Refund usually arises to the exporters or the person doing penultimate export i.e. sales against H forms, due to the fact that the export of goods outside India is considered as zero rated sales i.e. not liable for any vat liability and the tax paid on purchase of goods which are to be exported is refunded to the exporters as per provisions of section 18(2) of PVAT act 2005.

VAT refund may also be available due to various exemptions or concessional rate of CST as available under CST Act 1956 for example exemptions available u/s 6(2) for in transit sales against E1 or E2 forms or due to interstate stock transfer against F form when goods are purchased from within the state or due to concessional rate of CST as available against C forms resulting in excess of input tax credit over the output tax payable by a dealer.
VAT refund may also arise to works contractors due to TDS deducted on their payments u/s 27 of Punjab VAT act 2005.

Refund of vat paid on every single purchase of goods exceeding Rs 5000 to the persons or organizations listed in schedule G is allowed under section 18 of PVAT Act.

Refund may also arise due to the judgment of court or by an order of any authority under the act.

The authorities competent to grant refunds: Chapter VII of PVAT Act deals with the provisions relating to refunds under the said act. As per Section 39(1) its the commissioner or the designated officer who grants refund to a person subject to other provisions of the act and rules made thereunder of any amount of tax or penalty or interest if any paid in excess of the amount due and also the excess of input tax credit over output tax payable under the act.

As per rule 52(6) of Punjab VAT Rules if the refund amount does not exceed Rs 1 Lac the refund is issued by the designated officer and if the refund exceed Rs 1 lac then refund is issued after the final order of the AETC incharge of the District.

As per section 39(1) refund under PVAT Act may be granted either by way of refund voucher or at the option of the person claiming refund by refund adjustment order.

Refund to be paid after adjustment of any amount due from the person claiming refund: Proviso to Section 39(1) provides that the commissioner or designated officer shall first apply the amount of refund to be granted towards the recovery of any amount due in respect of which notice u/s 29(Notice for assessment) has been issued or any amount due, but not paid, before granting the final refund. Thus if any amount i.e tax or interest or penalty etc as a result of notice issued u/s 29 or otherwise is found due from the person claiming refund then such amount will be adjusted from the refund amount.

Refund may also be provisionally adjusted against tax due of subsequent periods: Section 39(2) also provides that if any refund is due to a taxable or registered person according to the returns filed for any period, such refund may be adjusted provisionally against the tax due and payable as the returns filed for any subsequent period.

Proviso to section 39(2) also provides that at the time of such adjustment any tax penalty or interest or any amount due from such taxable or registered person on the date of such adjustment shall first be deducted from such refund while making adjustment.

Thus its clear from the plain reading of first proviso to section 39(2) that if a dealer provisionally makes adjustment of refund against the tax due to him of any subsequent return period then he shall first adjust the amount of any tax, interest or penalty or any other amount due from him(it may be relating to any period) due from him as existing on the date of adjustment.

Refund in case of monthly return: There are certain persons under Punjab VAT Act who are required compulsorily to file their VAT returns monthly in addition to the quarterly returns. Second proviso to section 39(2) provides that if a person claims refund on the basis of his monthly return, the designated officer shall provisionally allow 75% of the amount of such refund claim, against submission of indemnity bond for the amount equal to the amount of refund claimed in the refund application.

After the receipt of the forthcoming quarterly returns, the designated officer shall cross check the transactions and after satisfying about the genuineness of the claim, the final amount of refund shall be determined.

Procedure for claiming refunds: Procedure for claiming refund under Punjab VAT Act is contained in rule 52 of Punjab VAT rules. The documents and forms required to be submitted for claiming refund and the form of application of refund and other conditions and procedure are provided as follows.

Format of application: Rule 52(1) of Punjab VAT Rules provides that the application for refund of an amount of tax, interest, penalty admissible under the Act and Rules will be made in form VAT-29. The application is to be made to the designated officer and shall contain the grounds for claiming the refund. Form VAT 29 contains the particulars like Input tax credit, output tax ,excess ITC carried forward, amount of ITC claimed as refund, sales under CST like direct export, indirect export, interstate sales/transfers, details of documents required in case of export or penultimate exports and details of forms under CST Act 1956 on account of which the refund has arisen.

Persons or organizations listed in schedule G may apply for refund to the designated officer in Form VAT 29A. But the refund to such person or organizations shall be granted only on the certification given the person or chief of the organization that the goods are purchased for use in the official functioning of the organization and the purchases of goods have been made from a taxable or registered person against invoice.

Filing of returns and tax payment is compulsory for claiming refund: Sub rule 8 of Rule 52 provides that no refund shall be allowed to any person if he has not filed return or paid tax as per provisions of the PVAT Act or PVAT rules. Thus requisite returns and requisite tax needs to be filed and paid before claiming for refund.

Documents required for claiming refund: Where refund is claimed u/s 18(2) i.e. on account of direct export out of the territory of India then the application for a claim of refund shall be supported by the following documents:

(a) copy of invoice issued to the foreign buyer

(b) Bill of lading, Airway Bill, Shipping Bill, or similar documents, containing Let Export Order endorsed by the Customs Authorities.

(c) Custom clearance certificate in case of export to Nepal and Bhutan; or

(d) Any other document, which may be specified by the Government.

Documents required in case of Penultimate export: Penultimate export is indirect export and is also considered as zero rated sales. It means sale by one dealer to another who exports the goods. In other words the local buyer is last in the chain and thereafter the goods are exported. The following documents are required to be furnished for claiming refund in case of Penultimate export:

(a) copy of Bill of lading, Airway Bill, Shipping Bill or similar documents, containing “Let Export Order” as endorsed by Customs Authorities; and

(b) copy of the invoice issued to the purchaser.

Forms under CST required for claiming refund: Sub rule 4 of rule 52 of PVAT rules provides that where refund arises due to excess ITC, which may be due to interstate sales, consignment or branch transfer, exports out of India or any other reason under the PVAT Act, the person claiming refund, shall attach documentary evidence in original in the form of statutory declaration that is C, D, E-I, E-II, F, H and I forms as the case may be, prescribed under the CST act 1956 and the rules made thereunder.

Thus declaratory forms if applicable have to be submitted for claiming refunds. Earlier before amendment of sub rule 52(4) the declaratory statutory forms under CST Act as applicable were required to be submitted along with the annual return. But after the amendment these forms are required to be attached while claiming refund.

Rule 52(5) further provides that if any claim is not supported by the aforesaid documents, then such refund claim shall not be admissible to the extent of such document being not furnished and the person shall file annual statement accordingly along with the additional tax, interest, penalty, if any.

If the refund is arising out of a judgment of a court or an order of an authority under the Act, the person claiming the refund, shall also append a certified copy of such judgment or order

Show Cause notice is to be issued if refund is found inadmissible: If the refund claim of a person is found inadmissible then designated officer has to issue a show cause notice to the person claiming refund as to why his application should not be rejected and if the reasons adduced by such person are found to be not satisfactory then such application for refund may be rejected.

Excess refund if granted to be adjusted in future: Rule 52(13) provides that if it is found that excess refund has been made in any period, the same shall be adjusted against the refund to be given in future or against future ITC available to such person u/s 13 of PVAT Act.

Penalty for wrong claim of refund: Section 56(f) also stipulates that if the commissioner or designated officer is satisfied that the person, in order to evade or avoid payment of tax, has claimed refund which was not due to him, he shall direct that the person shall pay, by way of penalty, in addition to the tax and interest payable by him, a sum equal to twice the amount of tax, assessed on account of the aforesaid reasons.

Refund must be issued within 60 days otherwise the interest on refund is payable: Section 40 of PVAT Act provides that if refund is not issued within 60 days from the date of application, simple interest at the rate of half percent per month on the said amount shall be paid to the applicant person from the date, immediately following the expiry of the period of sixty days to the date of refund. For interest calculation part of the month is considered as one month.

There may be cases where refund gets delayed beyond 60 days due to reasons attributable to the taxable or registered person applying for the refund as the case may be, in which case the period of such delay as attributable to such person shall be excluded from the period for which interest is payable. Where there is dispute as to such period to be excluded, such question is determined by the commissioner whose decision is final as per explanation 2 to section 40 of PVAT Act.

When refund may be withheld: Section 41 of PVAT Act provides that where an order giving rise to a refund is the subject matter of appeal or further proceeding or where any other proceeding under the act is pending and the officer competent to grant refund is of the opinion that the grant of refund is likely to adversely effect the revenue then such officer with prior approval of the commissioner withhold the refund till such time, as may be determined.

Thus refund may be withheld if granting of refund is likely to adversely effect the interest of the revenue, where an appeal or other proceeding under the act involving the order of refund is pending. As per section 41(2)Where refund is withheld u/s 41(1) then interest as per section 40 is payable on the amount of refund finally determined after such appeal or proceedings under the act, from the date, immediately following the expiry of period of 90 days from the date of the order referred to in section 41(1).

Under section 41(1) of PVAT Act, the refund cannot be withheld even if some appeal is pending in Supreme Court on the same point on the basis of which refund is due. Similarly refund u/s 41(1) of PVAT Act cannot be withheld on the argument that revenue involved in the case is substantial- Shiwalya Spinning & Weaving Mills(P) Ltd.,Ludhiana Vs. State of Punjab [(2007) 10 STM 682(HC-P&H)]

Rationale to be kept in mind while making order for withholding refund: The rationale to be kept in mind while withholding refund u/s 41(1) has been very well explained by Hon’ble Punjab & Haryana High Court in National Agricultural Co-op. Mrkt. Federation of India Ltd. Vs. State of Haryana- [(2009) 13 STM 115 (HC-P&H)] wherein it was held as follows:

“It may be pertinent to point out that the order withholding refund of huge amount running into crores should not be mechanically passed and the authorities working under the Act are required to be sensitized that the entrepreneurs who have limited liquidity are likely to suffer in their business enterprise. If the business enterprise comes to a stand still it does not advance the interest of the revenue because the state would stop earning revenue when the business of an entrepreneur comes to a grinding halt. The State authorities would be better advised if the aforesaid rationale is kept in view. While passing order withholding refund a balanced approach has to be adopted.”

Understanding process of obtaining lower rate of TDS certificate u/s 197


  • Determine the TDS deducted and advance tax paid till date and also determine the expected TDS on the revenue for the balance period of the financial year.
  • Based on the above, review the tax payable/ refundable periodically. 
  • In case there is expected tax refundable for the company, the finance professional should not block this company’s fund in the hands of Income tax department for next 2-3 years and should apply for lower TDS application to the TDS department immediately. 
  • For applying lower TDS certificate to the TD department, following documents are required to be submitted: 
  1. Covering letter disclosing nature of business of the company, reason for company should get lower TDS certificate and also details of the party with their correct address & TAN. 
  1. New Form 13 
  1. Estimated financials & computation of Total Income 
  1. Audited financials for the last 3 Years 
  1. Tax Audit Report of the Last 3 Years 
  1. Income tax return acknowledgment of last 3 Years 
  1. E TDS return acknowledgment for last 2 years of all the 4 quarters. 
  1. In case of any short payment of TDS in last 3 years, proof of the payment of TDS. 
  1. Copy of application & certificate obtained for earlier years. 
  • After submitting the aforesaid application to the TDS department, the AO will review your documents and they may ask further queries & documents to satisfy that your company is eligible for getting the lower TDS certificate. 
  • It must be noted that AO is not bound to issue TDS certificate, once the application had been filed. The AO issue the certificate based on the merit on case to case basis. 
  • You must provide the correct TAN of all the parties for whom you want the TDS certificate as now a days, department are issuing only system generated certificate based on the TAN.
  • Further, from April 1, 2011 department are not issuing nil TDS certificate to anyone. Hence, you must apply only for lower TDS certificate only and must mention the lower rate as required.    Also in cities like Bangalore, Income tax department makes the process online.

 What To Do If The A.O Does Not Respond To Your Application For Lower Deduction Certificate?

The deliberate inaction by the A.O on an application made by the assessee for certificate u/s 197 is very unfortunate . The provision under section 197 does not give any discretion to sit on the application because the provison uses the word “shall ” . Read the provision u/s 197

  1. (1) Subject to rules made under sub-section (2A), where, in the case of any income of any person or sum payable to any person, income-tax is required to be deducted at the time of credit or, as the case may be, at the time of payment at the rates in force under the provisions of sections 192, 193, 194, 194A, 194C, 194D,194G 194H, 194-I 194J194K 194LAand 195, the Assessing Officer is satisfied that the total income of the recipient justifies the deduction of income-tax at any lower rates or no deduction of income-tax , as the case may be, the Assessing Officer shall, on an application made by the assessee in this behalf, give to him such certificate as may be appropriate.
Therefore, inaction in not giving any order is an illegal act. You should write to the A.O that in case he does not dispose off the application with in seven days from the receipt of reminder, you will be constrained to apply before Add.Commissioner/JtCIT concerned. If even ADCIT/JCIT does not give you relief after seven days , write to Commissioner of the charge.
After failing even from that level ,following remedy lies for you
1. File an application with the grievance cell ,stating the full facts. The grievance cell is a mechanism whose data goes to CBDT and even chief commissioner of income tax are accountable for its disposal.
  1. A softer approach is to write to CIT concerned and if he does not respond writing to his superior enclosing the proof of filing application with him.
    3.As far as jurisdiction of ombudsman is concerned , there is no specific mention of such wrong doing within the purview of him, still there is clause “O” of section 9 of The Income Tax Ombudsman Guidelines 2006 which says
    “9 . Grounds on which complaint shall be filed
    i. (o) any other matter relating to violation of the administration instruction and circulars issued by the Central Board Of Direct Taxes in relation to income tax administration”
In this regard , circular no 774 dated 17.3.1999 is important to refer. The said circular warns A.Os , not issue the certificate u/s 197 in case where payment has already been done and TDS is made. But the point to be noted is that the said circular states under point 3 circumastances when the certificate should not be issued. In other words , in all other cases not falling under the condition mentioned in the circular , should be issued by the A.O.So, you can file application under clause (o) of Section 9 of The Income Tax Ombudsman Guidelines 2006. The said circular is as under
Circular No: 774, Date of Issue: 17/3/1999
Subject: Issue of certificate under section 197(1) of the I. T. Act.
Section 197(1) of the Act envisages that, where tax is deductible at source in terms of sections 192, 193, 194, 194A, 194D, 194-I, 194K and 195 of the Income-tax Act, and the recipient justifies the deduction of tax at any lower rate or no deduction of tax to the satisfaction of the Assessing Officer, the Assessing Officer shall issue an appropriate certificate. It has come to the notice of the Board that in certain charges a practice has developed to issue certificates under section 197(1) of the Income-tax Act even after the credit or payment of amounts subject to tax deduction at source. This is not in accordance with the provisions of law. It is, therefore, clarified that the certificate issued under section 197(1) of the Income-tax Act will be applicable only in respect of credit or payments, as the case may be, subject to tax deduction at source, made on or after the date of such certificate. Therefore, no certificate under section 197(1) of the Income-tax Act should be issued after the amounts subject to tax deduction at source stand credited or paid, whichever is earlier. In other words, henceforth application requesting for certificate under section 197(1) should not be acted upon if submitted after credit/payment of the amount subject to tax deduction at source. However, assessees having genuine hardship in submitting such applications on time may refer to the Board for condonation of delay in terms of section 119(2)(b) of the Income-tax Act.
(Sd.) Narottam Mishra, Deputy Secretary (Budget). [F. No. 275/98-IT(B)]
  1. Another remedy is to amke an application under Right to Information Act. These days A.Os have been made Public Information officer and Jt.CIT/Add.CITas CPIO. You can ask the A.O under RTI the reasons why no order for granting or rejecting the certificate was issued on your application. Since there is time limit within which a reply is to be given , something will move from otherwise inefficent official
Circulars in respect of section 197.

Section 197 of the Income-tax Act, 1961 – Deduction of tax at source – Certificate of lower deduction or non-deduction of tax at source Instruction No. 7/2009 [F.No. 275/23/2007- IT-(B)], dated 22-12-2009 I am directed to bring to your notice on the subject of issue of certificates under Section 197. Instruction No- 8/2006 dated 13.10.2006, was issued stating that 197 certificates for lower deduction or nil deduction of TDS u/s 197 are not to be issued indiscriminately and for issue of each certificate, approval of the JCI/Add. CIT concerned need to be taken by the Assessing Officer (AO). Further, a letter of even number dated 6.10.2008 was issued stating that power of issue of certificates under Section 197 would ordinarily be exercised by the officers manning TDS Administration. However, instances are being brought to the notice of Board that the AOs are issuing certificates for lower or non-deduction of tax at source under Section 197 indiscriminately, in contravention of relevant Income Tax Rules and Instructions. I am, therefore, directed to communicate to you that further to the contents of Instruction No-8/2006, prior administrative approval of the Commissioner of Income Tax (TDS) shall be taken (where the cumulative amount of tax foregone by non-deduction/ lesser rate of deduction of tax arising out of certificate under Sec, 197 during a financial year for a particular assessee exceeds Rs. 50 lakh in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmadabad and Pune stations and Rs. 10 lakh for other stations. Once the CIT (TDS) gives administrative approval of the above, a copy of it has to be endorsed invariably to the jurisdictional CIT also. The content of the above instruction may be brought to notice of all officers working in your charge for strict compliance.

Amendment in Rule 28AA made by Notification 46/2014 dated 24-09-2014
Under section 197(1) of the Income Tax Act, 1961, a person who is in receipt of any income on which tax is required to be deducted at source at the rates prescribed under the provisions of sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194K, 194LA and 195, can make an application in Form No. 13 to the Income Tax Assessing Officer for issue of a certificate for deduction of TDS at rates lower than prescribed.
If the Assessing Officer is satisfied that existing and estimated tax liability on the total income of the applicant justifies the deduction at lower rates or at no deduction at all, he/she may issue such certificate.
When the recipient furnishes such certificate to the person responsible for paying the income, the payer, until the certificate is revoked/cancelled by the Assessing Officer, shall deduct tax as per rates / deduct no tax as specified in the certificate.
Rule 28AA of the Income tax Rules, 1962, prescribes the rules to be observed in this regard. Sub Rule (2) provides that the existing and estimated tax liability shall be determined by the Assessing officer after taking into the consideration, the following:
  1. tax payable on estimated income of the previous year relevant to the assessment year
    2. tax payable on the assessed or returned income, as the case may be, of the last three previous years.
    3. existing liability under Income Tax Act, 1961 and Wealth tax Act, 1957
    4. advance tax payment for the assessment year relevant to the previous year till the date of the making application.
    5. tax deducted at source/tax collected at source for the assessment year relevant to the previous year till the date of the making application.
The certificate can be issued for part of or complete previous year. Sub Rule (3) provides that the certificate issued by the Assessing Officer shall be valid for such period of the previous year as specified unless cancelled before the expiry of such period.
Sub rule (4) and (5) of Rule 28AA has been substituted and new sub rule (6) has been added as under
RuleBefore amendmentAfter amendment
28AA(4)The certificate shall be valid only with regard to the person responsible for deduction of tax named therein.The certificate for no deduction of tax shall be valid only with regard to the person responsible for deducting the tax and named therein.
28AA(5)The certificate shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.The certificate referred to in sub-rule (4) shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.
28AA(6) 
The certificate for deduction of tax at lower rate shall be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after deduction of tax at lower rate

Implications of the amendments:
The certificate for lower deduction could now be a general one, issued to the applicant directly. The previous requirement of issue to and naming the person responsible in the certificate has now been restricted only to certificate for no or nil-deduction of tax. Form 13 has also been amended accordingly.
CPC(TDS) has issued a letter to all deductors regarding clarification of “Lower Deduction/No deduction u/s 197 or 197A