lower deduction certificate
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
19 May 2011
Can a Banking credit co-op soc. take a lower deduction certificate for TDS under section 197 of income tax act?
Can a cooperative credit society doing banking business keep its FD with scheduled bank and save itself from deduction of TDS?
Can a cooperative credit society doing banking business keep its FD with scheduled bank and save itself from deduction of TDS?
19 May 2011
1. Not Possible
2. Not Possible
2. Not Possible
19 May 2011
dear friend As per 1st Query : Any taxpayer can apply for the certificate of deduction of tax at lower rate u/s 197 of the I.T. Act.
and 2nd Query : YOu can do this but so far as concern you can not save TDS amount.
and 2nd Query : YOu can do this but so far as concern you can not save TDS amount.
Querist : Anonymous
Querist :
Anonymous
(Querist)
20 May 2011
1.can you please let me know why it is not possible?
2. Is this income taxable in the hands of Co-op credit so doing banking business
2. Is this income taxable in the hands of Co-op credit so doing banking business
03 August 2024
### Lower Deduction Certificate for Cooperative Credit Societies
1. **Eligibility for Lower Deduction Certificate (Section 197):**
- **Banking Credit Cooperative Societies**: Yes, a cooperative credit society, including those engaged in banking activities, can apply for a lower deduction certificate under Section 197 of the Income Tax Act.
- **Purpose**: This certificate allows a taxpayer to request a lower rate of TDS or no TDS if their effective tax rate is lower than the standard rate applicable to the income in question.
2. **Using FD Income:**
- **TDS on FD Interest**: Interest income from Fixed Deposits (FDs) is subject to TDS under Section 194A if the interest exceeds the threshold limit. Even cooperative credit societies may have FDs with scheduled banks and might be subject to TDS on such income.
- **Avoiding TDS**: By obtaining a lower deduction certificate under Section 197, the cooperative society can potentially avoid higher TDS rates. This certificate needs to be applied for and issued by the Income Tax Department.
### **Details and Clarifications**
1. **Why a Lower Deduction Certificate May Be Needed:**
- **TDS Application**: When a cooperative society has significant interest income, TDS may be deducted at a standard rate. If the society’s effective tax rate is lower, they can apply for a lower deduction certificate to ensure that TDS is deducted at a lower rate or not deducted at all.
- **Certificate Process**: The process involves submitting Form 13 to the Income Tax Department to request the certificate. This form provides details about the income, expected TDS rate, and the reason for the lower rate request.
2. **Taxability of Income:**
- **Interest Income**: The interest income earned from FDs or any other sources is taxable in the hands of the cooperative credit society. The lower deduction certificate does not change the fact that the income is taxable. It only affects the amount of TDS deducted.
- **Tax Return**: The cooperative society must report this interest income in its income tax return and pay the tax as per its effective tax rate. If TDS is lower due to the certificate, any additional tax liability needs to be settled while filing the return.
### **Summary**
1. **Yes,** a cooperative credit society engaged in banking can obtain a lower deduction certificate under Section 197 if it meets the criteria.
2. **Interest Income Taxability**: Income from FDs is taxable and must be reported in the society’s tax return. The lower deduction certificate only affects the TDS rate, not the taxability of the income itself.
### **Steps to Apply for a Lower Deduction Certificate:**
1. **Fill Form 13**: Provide details about the expected income and TDS rate.
2. **Submit Form**: Submit it online through the Income Tax e-filing portal or to the Assessing Officer.
3. **Receive Certificate**: Once processed, the certificate will specify the lower rate of TDS.
For further clarification and the exact process, consulting with a tax professional or the Income Tax Department directly is advisable.
1. **Eligibility for Lower Deduction Certificate (Section 197):**
- **Banking Credit Cooperative Societies**: Yes, a cooperative credit society, including those engaged in banking activities, can apply for a lower deduction certificate under Section 197 of the Income Tax Act.
- **Purpose**: This certificate allows a taxpayer to request a lower rate of TDS or no TDS if their effective tax rate is lower than the standard rate applicable to the income in question.
2. **Using FD Income:**
- **TDS on FD Interest**: Interest income from Fixed Deposits (FDs) is subject to TDS under Section 194A if the interest exceeds the threshold limit. Even cooperative credit societies may have FDs with scheduled banks and might be subject to TDS on such income.
- **Avoiding TDS**: By obtaining a lower deduction certificate under Section 197, the cooperative society can potentially avoid higher TDS rates. This certificate needs to be applied for and issued by the Income Tax Department.
### **Details and Clarifications**
1. **Why a Lower Deduction Certificate May Be Needed:**
- **TDS Application**: When a cooperative society has significant interest income, TDS may be deducted at a standard rate. If the society’s effective tax rate is lower, they can apply for a lower deduction certificate to ensure that TDS is deducted at a lower rate or not deducted at all.
- **Certificate Process**: The process involves submitting Form 13 to the Income Tax Department to request the certificate. This form provides details about the income, expected TDS rate, and the reason for the lower rate request.
2. **Taxability of Income:**
- **Interest Income**: The interest income earned from FDs or any other sources is taxable in the hands of the cooperative credit society. The lower deduction certificate does not change the fact that the income is taxable. It only affects the amount of TDS deducted.
- **Tax Return**: The cooperative society must report this interest income in its income tax return and pay the tax as per its effective tax rate. If TDS is lower due to the certificate, any additional tax liability needs to be settled while filing the return.
### **Summary**
1. **Yes,** a cooperative credit society engaged in banking can obtain a lower deduction certificate under Section 197 if it meets the criteria.
2. **Interest Income Taxability**: Income from FDs is taxable and must be reported in the society’s tax return. The lower deduction certificate only affects the TDS rate, not the taxability of the income itself.
### **Steps to Apply for a Lower Deduction Certificate:**
1. **Fill Form 13**: Provide details about the expected income and TDS rate.
2. **Submit Form**: Submit it online through the Income Tax e-filing portal or to the Assessing Officer.
3. **Receive Certificate**: Once processed, the certificate will specify the lower rate of TDS.
For further clarification and the exact process, consulting with a tax professional or the Income Tax Department directly is advisable.
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