TDS Statutory Law: Chapter XVII-B Provisions, Lower Deduction & Default Rules

टीडीएस कानूनी नियम एवं धाराएं (Chapter XVII-B)

Comprehensive guide to Chapter XVII-B of the Income Tax Act 1961 governing Tax Deducted at Source: deduction liabilities, Section 197 lower deduction certificates, Section 206AA non-PAN rates, and prosecution provisions under Section 276B.

Written by: Author Profile

Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel

Tax Law & Dispute Review Desk

Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

Section 190 & 191: Direct payment vs deduction of tax at source principles.

Section 197: Application to Assessing Officer for certificate for lower deduction or NIL deduction in Form 13.

Section 197A: Declaration in Form 15G / Form 15H for non-deduction of tax on dividend/interest income.

Section 206AA: Statutory mandate requiring 20% higher deduction if payee fails to furnish valid PAN.

Section 276B: Prosecution with rigorous imprisonment (3 months to 7 years) for failure to deposit deducted tax to government credit.

Who is Eligible & When Does it Apply?

Applicability #1

All deductors and deductees governed by Chapter XVII-B.

Step-by-Step Procedure & Compliance Roadmap

Verify Lower Deduction Certificates (Form 13)

Validate certificate 10-digit alphanumeric code on TRACES before applying lower rate.

Apply Correct Statutory Section

Follow CBDT circulars for composite supply vs pure service contracts.

Remit Deductions within Statutory Deadlines

Deposit before the 7th of the following month to avoid Section 201 interest.

Mandatory Documents Checklist

Chapter XVII-B statutory provisions, Form 13 certificates, Form 15G/H declarations

Common Mistakes & Compliance Risks to Avoid

•Applying Section 197 lower rate certificates beyond the specified validity amount or financial year.

Frequently Asked Questions

How to obtain a NIL or Lower TDS Certificate?

Apply online on the Income Tax e-filing portal in Form 13 under Section 197. The Assessing Officer verifies estimated annual income and issues a digital lower TDS certificate valid for that FY.

Interactive Tax Calculators

TDS Calculator

Related Tax Knowledge

TDS Rates Matrix

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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.