Usage and Validity of Certificate
- Time period of validity – One Financial Year
Once the certificate has been issued by the Assessing Officer, then it shall be valid for the rest of the financial year. In simple words, the application can be made and certificate can be issued only for a particular financial year, and again for the next year the assessee has to follow the same process. Also the certificate shall apply only to the transactions entered into after approval of application.
- Parties entitled to use
Only the parties mentioned in the application are entitled to use the Lower Deduction Certificate. The Deductee cannot claim lower/No deduction from any party other than those mentioned while making application in Form 13.
- % of deduction applicable
The deductor is then responsible to deduct tax at the rate mentioned in the certificate or not deduct any tax as the case may be.
- Amount of transaction
The applicability/ validity of the Certificate is limited to the value of the transactions mentioned in the application against the respective parties/ deductor.
Modification of Certificate
As a general practice the application for lower deduction certificate is made at the beginning of any financial year. However, during the year there ought to be certain circumstances/transactions, as mentioned below, that may require modification of the said certificate.
- Cases that require Modification
- Exhaustion of the permissible limit of transaction value mentioned in the certificate
- Addition of new parties/deductor(s)
- Deduction of tax under an additional section by an already existing party/deductor
- Procedure of modification
The procedure for modification is similar to that of original / fresh application. However the deductor will have to submit additional documents as evidence to the modification required.
- Specific requirements
The deductor will have to re-submit revised projected financials for the financial year under consideration. In addition, the deductor will also have to submit Form 26AS with the application.
However, the AO may again demand for additional evidences based on the case of modification.
- Time limitation for modification:
The Certificate can be modified only till 15th of March of the relevant ‘current financial year’. The Certificate shall be applicable prospectively and not retrospectively.