Section 197 of the
Income-tax Act, 1961 - Deduction of tax at source - Certificate of lower
deduction or non-deduction of tax at source
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.