TDS (Tax Deducted at Source) eats into your working capital — especially if you’re a service provider, consultant, or commission agent. But did you know that you can apply for a Lower TDS Deduction Certificate (LDC) from the Income Tax Department?
With this certificate, your clients can deduct lesser TDS, or in some cases, no TDS at all.
Let’s break down the process, eligibility, benefits, and mistakes to avoid in 2025 — so you keep more cash in hand.
🔹 What is a Lower TDS Deduction Certificate?
A Lower TDS Deduction Certificate is a formal approval issued under Section 197 of the Income Tax Act, allowing income to be taxed at a reduced rate — or even 0%.
It’s issued by the Assessing Officer based on your income-tax filings and projected income.
✅ Useful for:
- Freelancers and consultants
- Contractors and professionals
- Businesses receiving large commissions or rentals
- Companies with large refund claims
🔹 Benefits of Having This Certificate
- Improved Cash Flow: Less TDS means more funds in hand to pay salaries, bills, or reinvest.
- Avoiding Refund Delays: You don’t have to wait 9–12 months to get your TDS refund.
- Better Vendor Confidence: Clients see you as tax-compliant and confident in your documentation.
- Eases Audit and Advance Tax Management: Your estimates are better aligned with actual tax liability.
🔹 Who Can Apply for LDC?
You’re eligible if:
- Your income is not taxable (after deductions), or
- You’ve consistently paid advance tax or filed ITRs properly, or
- You’ve received large refunds in previous years due to excess TDS
Common industries that apply include:
- Software services
- Influencers & agencies
- Affiliate marketers
- Real estate agents
- Consultants and professionals
🔹 Step-by-Step Process to Apply
- Prepare Form 13 with financial projections, income details, and estimated profit
- Submit Form 13 online via the TRACES portal
- Upload required documents — ITRs, computation sheet, audited financials, and justification
- Respond to AO queries if raised (through the portal)
- Receive the LDC digitally, typically within 15–30 working days
Start Bharat helps prepare your projections, documentation, and tracks the case end-to-end with the Assessing Officer.
🔹 Common Mistakes to Avoid
🚫 Submitting the application too late in the financial year
🚫 Inflated or vague projections — leads to rejection
🚫 Not matching income heads properly with PAN records
🚫 Missing earlier years’ ITR or audit report attachments
🚫 Not following up — leads to delays or lapsed opportunity
Pro Tip: Apply by May–July to maximize benefit across financial year.
🔹 Validity and Renewal
- The certificate is usually valid for one financial year
- You must re-apply every year before April or May to avoid full-rate TDS
- Once approved, it must be shared with all deductors to apply the lower rate
🔹 Final Thoughts
In 2025, efficient tax planning isn’t optional — it’s survival.
A Lower TDS Deduction Certificate helps service businesses keep liquidity strong, avoid refund delays, and present a tax-clean image.
But the process needs precision — and that’s where Start Bharat comes in.
🔹 Call to Action
Want to reduce TDS on your income this year?
