NRIs usually lose large sums of money to excessive TDS on their Indian income. They face the 20-30% TDS plus surcharge and cess on income like capital gains, property sales, dividends, and interests. NRIs face higher TDS deductions on the income they earn in India. However, through a Lower TDS Certificate under Section 197, they can reduce the TDS rate applicable to income. 

The solution is Form 13. It helps you to apply for the lower TDS certificate for NRI under Section 197 of the Income Tax Act. By filing Form 13, NRIs can claim a refund of excess TDS. It can be done after the financial year ends.

Lower TDS Certificate Meaning & Legal Basis

The lower TDS certificate is the approval issued by the Assessing Officer (AO) under Section 197 of the Income Tax Act. It deducts the tax at a reduced rate, on the basis of the estimated income and tax liability of the NRI for the year. There are two types of TDS Certificate.

• NIL deduction certificate: After Budget 2025 changes (Clause 395), NRIs can not apply for a ‘NIL’ TDS certificate. Only lower TDS certificates are allowed.

• Lower deduction certificate: TDS is deducted at a lower rate, usually 10%. It depends on actual estimated income/tax liability and gets determined by the Assessing Officer (AO). (Income Tax India)

The problem of high TDS rate comes up because TDS is taken out of the gross amount, without taking into account the NRI's actual tax liability or any deductions or exemptions that may apply. In many cases, NRIs get big refunds, but they have to wait months for them.

You can fill in Form 13 as an NRI and get these certificates through the TRACES portal.

When to Apply for a Lower TDS certificate as NRI

NRIs whose TDS exceeds their actual tax liability can apply for a Lower TDS Certificate under Section 197 

• If net income is less than the basic exemption limit 

• Loss-making business 

• On rental income from Indian property 

• Other income, like interests, dividends, etc, is applicable to TDS

Eligibility & Documents Required

NRIs who are earning income in India face the TDS under Section 195. But they can apply for the lower TDS Certificate under Section 197 by meeting the following eligibility conditions. 

• The actual tax liability is less than the standard TDS rate ( 20% on property value) 

• An NRI should have a valid Indian PAN  to apply for 

• Must have regular return filing and no pending dues 

• The certificates must have a valid period as set by the Assessing Officer

 Documents required

Below are the documents commonly needed to apply for a lower TDS certificate for NRI 

• PAN card copy

• Passport (with entry/exit pages to confirm NRI status)

• ITR acknowledgments (last 2–3 years)

• Form 26AS (TDS verification)

• Past and current income computation statements

• TAN of the tax deductor (e.g., buyer)

• Income-related documents like sale deed, payment proofs, draft sale agreement, and bank statements)

Step-by-Step Process (Online Form 13 Filing)

Here is the step-by-step process you should follow to apply for the lower TDS in India as an NRI

• Register on the TRACES portal: First, you should create an account at the TRACES portal by using PAN. 

• Login: Now, log in to your account 

• Select form 13: Navigate to the “Statements/Forms” and select form 13 

• Fill details: Start filling your details like tax liability, estimated income, residential status (Non-Resident), and the deductor's TAN in the form.

• Upload documents: Attach all your essential documents to the form as mentioned above 

• Verify: Now, verify the details by using the Digital Signature Certificate (DSC).

• Submit: Now submit the form and track it online. 

• Get certificate: Wait for sometime, and AO will issue the lower TDS certificate to you.

Validity, Timelines & Renewal Rules

The time taken to receive the lower TDS certificate is 30-45 days after you fill Form 13. AO will issue this certificate for a specific period, and it has a validity period mentioned on it. This certificate is valid at the end of the relevant financial year or till it is cancelled by the AO before expiry. NRI must initiate the renewal before the expiry date or before the start of the new financial year by filling the same form 13. 

Effect of a Lower TDS Certificate for NRI (with Example)

A lower TDS certificate for NRI helps them to reduce excess tax deductions on the income they generate in India. It ensures that taxation aligns with actual liability. Let us look at the effect of a lower TDS certificate for NRI through the given example 

Cross-Border Impact & Repatriation Advantages

A lower TDS aligns the TDS rates with actual tax liability in India and helps NRIs to manage the repatriation of funds and cross-border finances. Here are its benefits 

• It keeps more funds available in the US/UK/UAE and improves cash flow 

• It ensures fair taxation by applying TDS only to actual income or capital gains 

• You don't need to wait for a long time to get tax refunds 

• Lower TDS certificate complies with DTAA and FEMA, and eases fund repatriation.

• Valid for 1 financial year 

Conclusion

Lower TDS Certificate under Section 197 helps NRI to avoid extra tax for NRIs.  and ensure transparent, convenient and quick Form 13 filing. Hence, it saves your time and money on taxable transactions you made in India. 

By filing Form 13 through TRACES and sending in the right papers, NRIs can make taxes easier, improve cash flow, make it easier to send money back home, and stop taxes from getting stuck. A lower TDS certificate makes sure that your Indian income is handled promptly and cost-effectively, whether you are selling property, earning rental income, receiving interest, or dividends.

FAQs

1. Can an NRI apply for a lower TDS certificate?

Yes, an NRI can apply for the lower TDS certificate by filling form 13, verified by DSC.

2. How can NRI reduce tax on property sales?

You can get the lower TDS certificate by filling form 13 and easily reduce tax on property sales. 

3. How long does it take to get a lower TDS certificate for NRIs?

Usually, an NRI should wait for 30-35 days to receive the lower TDS certificate after submitting Form 13.

4. How can I apply for Form 13?

Applying for Form 13 is easier through the Income Tax Portal. Just visit the Income Tax Portal, fill in Form 13, upload your documents and submit the application.