1. Why a Lower Deduction Certificate still matters in 2025-26
Receiving payments after TDS has been chopped off at the highest default rate ties up working capital and forces you to wait months for refunds. A Lower Deduction Certificate issued under Section 197 is the Income-tax Department’s official green light that tells your customer (or employer, or tenant) to deduct tax at a reduced or zero rate that matches your real tax liability.
2. What changed on TRACES this year?
| FY | Where you apply | Cut-off for online filing | Major tweak |
|---|---|---|---|
| 2024-25 | Classic TRACES | 15 Mar 2025 | Form 15E added for payers |
| 2025-26 | New “TRACES 2.0” interface | Open all year | Single dashboard shows Form 13, 15E, past certificates |
The new TRACES dashboard now places Form 13 (for recipients) and Form 15E (for payers) side by side, making it harder to click the wrong form.
3. Quick cheat-sheet: who files which form?
| Use-case | Correct form | Certificate you finally get |
|---|---|---|
| You’re an Indian consultant, want 4% TDS instead of 10% on fees | Form 13 | Lower Deduction Certificate |
| You’re a buyer paying an NRI seller for a flat | Form 15E | Order determining income portion subject to TDS |
4. Pre-application checklist (don’t hit “Submit” without these)
| Item | Why the AO asks for it |
|---|---|
| Last three years’ ITR acknowledgements | Proves historic taxable income |
| Signed provisional P&L + balance-sheet for FY 2025-26 (April – submission date) | Supports your income estimate |
| Projection of income & tax payable for full FY | Basis for the reduced rate sought |
| Details of every payer & proposed TDS section | Ensures certificate mentions all sections |
| Copies of big contracts/invoices | Cross-checks turnover figures |
Upload each file in PDF ≤5 MB; combine pages if needed.
5. Step-by-step walkthrough on the new TRACES screen
- Login – Go to
https://contents.tdscpc.gov.in→ Login → choose Taxpayer and enter PAN, password & OTP. Income Tax Delhi - Navigate – Home → Statements / Forms → Form 13 / 15E tile.
- Select “Create Request” – the portal auto-fills your PAN, name, mobile and email.
- Financial Year – pick 2025-26 and click Proceed.
- Income Estimate Section
- Punch in projected turnover, gross receipts, expenses, depreciation and other income.
- Portal auto-calculates taxable income and tax liability using FY 2025-26 slab rates.
- TDS Details Grid
- Add each Section (e.g., 194J, 194C) and the payer’s TAN.
- Enter Estimated amount to be received and Rate requested (say 4 %).
- Attach Documents – drag-and-drop the PDFs from the checklist above.
- Preview & e-Verify
- Review the summary.
- Authenticate with Aadhaar OTP or DSC.
- Acknowledgement – Note the 15-digit Request Number (starts with “13-”) and download the receipt.
6. Tracking the status & downloading the certificate
- Dashboard → Submitted Requests – filter by FY 2025-26.
- Five status codes to watch:
| Code | Meaning | Typical timeline |
|---|---|---|
| Pending at AO | Officer yet to open file | 5–15 days |
| Clarification sought | AO raised query on TRACES | Respond within 7 days |
| Approved – In Process | AO signed but HQ review pending | 1–3 days |
| Certificate Generated | Downloadable PDF now live | — |
| Rejected | See reason note; re-apply | — |
.
7. Common snags (and quick fixes)
| Snag | Why it happens | DIY Fix |
|---|---|---|
| Attachment size error | Single PDF > 5 MB | Compress or split file |
| “Mismatch in turnover” query | Projection ≠ past trend | Upload explanation letter |
| Payer can’t see rate in their TAN login | You forgot to list that TAN | File Add Payer amendment |
8. FAQ burst
Q1. How early should I file?
April is ideal. Certificates are valid up to 31 Mar 2026 regardless of issue date, but filing early avoids default-rate TDS in Q1.
Q2. Can I include new clients mid-year?
Yes. Use Amend Request → Add Payer and quote their TAN. The amended Lower Deduction Certificate downloads instantly after AO approval.
Q3. Is Form 13 compulsory for every payment?
Only if you want relief. Otherwise deductors must apply the default rate (often 10 % or 20 %).
Q4. Does an NRI selling property file Form 13 or 15CA/CB?
File Form 13 for a lower-rate certificate; the buyer then uses that rate while uploading Form 15CA.
Q5. How long does approval really take?
Straightforward cases: 2–3 weeks. Complex cases with international income or losses: 4–6 weeks.
9. Insider tips to speed up approval
- Show advance tax / TDS already paid to prove your credibility.
- Avoid ultra-low rates (e.g., 0.5 %) unless loss carry-forward justifies it; officers view 3–5 % as more reasonable.
- Respond to queries within 24 hours – the seven-day window is the outer limit, not a target.
- Maintain one point of contact (your CA’s email) to avoid lost clarification mails.
10. Snapshot of a real certificate (anatomy)
| Field | What to verify |
|---|---|
| “Valid from / to” | Should show 01-Apr-2025 to 31-Mar-2026 |
| “Applicable Sections” | All the TDS sections you listed |
| “Rate of deduction” | Decimal accuracy (e.g., 4.00 %) |
| “TAN/PAN of payer” | Every client you named |
11. Final word
Lower Deduction Certificate applications may sound bureaucratic, but the new TRACES layout strips away much of the old friction. Spend an hour gathering documents, follow the on-screen wizard, and you could keep lakhs of rupees in circulation instead of awaiting refunds next summer. If your business lives on tight cash cycles, treating the Lower Deduction Certificate as an annual April ritual is arguably the best free working-capital loan you’ll ever get.
