19 March 2012
Suppose I have a company. I want to pay commission from my company of Rs. 1 lacs to an individual, who give me a written declaration that his total income is below the exempted slab of income tax and he requesting not to deduct TDS on his commission.Can the company do so on the basis of this declaration. If so pls give me the relevant section or notification available if any.
As per Section 197A(1) and 197A(1A). If payee furnishes your any such declaration in writing to the effect that the tax on his income so computed (including commission) is NIL. NO tax deduction shall be made only if the amount payable falls under section 194 (dividend Income) and 194EE (Payments under NSS).
So in your case Deduction has to be made even if he gives you declaration because the income which you are paying falls under 194H.
21 March 2012
Sorry experts self declaration shall not be sufficient you have to procure a certificate from the concerned Income Tax Officer TDS that no deduction of tax be made from the person concerned who is in receipt of income below 1 lac otherwise you have to deduct tax without any excuse.
21 March 2012
That is what I meant. Self declaration is sufficient in case of 194 and 194 EE. In all other cases a certificate from AO for low deduction or no deduction in form 13 and moreover section 197 provides no such limit for getting the certificate.
The friend who asked the question talked about declaration received that is why I have quoted 197A(1) and 197A(1A)
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