# Common TDS Provisions — No / Lower Deduction

## Section 196 — No TDS on payments to specified bodies

No TDS is required where the payment is made to:

Government
RBI
Statutory Corporation whose income is exempt from tax
Mutual Fund covered u/s 10(23D)

## Section 197 — Certificate for Lower / No Deduction

Deductee can apply to the Assessing Officer for a certificate authorising the payer to deduct TDS at a lower rate (or NIL).
Granted if AO is satisfied that the recipient's total tax liability justifies it.
Available across most TDS sections (192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, etc.).

## Section 197A — Self-Declaration by Deductee

Resident Individual / Person (other than Co./Firm) can submit a self-declaration (Form 15G for non-senior; Form 15H for senior citizens) that his total income will be below the basic exemption limit.
On receiving the declaration, no TDS is deducted.
Applies to: Sec 192A, 193, 194, 194A, 194D, 194DA, 194I, 194K, 197A (per the chart).

## Section 206AA — Higher TDS if PAN not furnished

If the deductee fails to furnish PAN, TDS is deducted at the HIGHER of:

1. The rate specified in the relevant TDS section, OR

2. The rate in force, OR

3. 20% (or 30% for lotteries/winnings, etc.)

Worked example

### Example 1

Example (197): A startup expecting losses applies for a Sec 197 certificate. AO authorises TDS @ 1% (vs normal 10%) — payer deducts only 1%.

### Example 2

Example (197A): A senior citizen earning FD interest of ₹80,000 (total income ₹2,80,000, below BEL ₹3,00,000) files Form 15H — bank doesn't deduct TDS.

### Example 3

Example (206AA): Co. pays professional fees of ₹50,000 to a CA without PAN. TDS = higher of 10% or 20% = 20% = ₹10,000.

### Example 4

Example (206AA): Lottery winning ₹1,00,000, no PAN — TDS @ 30% (since the specified rate itself is 30%, the higher of 30%/20% is 30%).

⚠️ Common exam mistakes

Accepting Form 15G/15H from non-residents or from companies/firms — these declarations are only for Individuals (15G) and Senior Citizens (15H).
Forgetting to apply 206AA — using normal rate even when PAN is missing.
Issuing Form 15G/15H when total income actually exceeds the basic exemption limit (penal consequences).

Reference: 196 / 197 / 197A / 206AA

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Common Provisions — Sections 196, 197, 197A and 206AA

Worked example

⚠️ Common exam mistakes