Compliance with Lower Deduction Certificate issued under Section 395(1)/395(3) of the Income Tax Act, 2025 for FY 2026–27

Dear Members,

The Income Tax Department, Office of TDS Circle 76(1), Delhi, has approved the application filed by Trade Promotion Council of India (TPCI) in Form 13 and has issued a Lower Deduction Certificate under Section 395(1)/395(3) of the Income Tax Act, 2025 for Financial Year 2026–27.

2. The certificate permits deducting tax at a concessional rate of 0.05% (excluding surcharge and cess, wherever applicable) in respect of specified categories of receipts and transactions, subject to the prescribed conditions.

3. The certificate is valid from 22 May 2026 to 31 March 2027 and covers specified categories including contracts, commission, rent, technical services and professional services.

4. The Income Tax Department has further stipulated that the Master Certificate cannot be directly furnished to the payer for availing the benefit of lower deduction of tax. Instead, a payer-specific Child Certificate is required to be generated through the TRACES portal and furnished to the concerned payer before payment or credit, whichever is earlier.

5. Accordingly, all Members are requested to ensure compliance with the prescribed procedure.

Activity Flow for Compliance under Lower Deduction Certificate (FY 2026–27) is attached as per Annexure I.

 

ANNEXURE – I

Activity Flow for Compliance under Lower Deduction Certificate (FY 2026–27):

A. BUSINESS TEAM / DIVISION – INITIATION
Step 1 – Identify transaction likely to attract TDS.
Step 2 – Inform Finance & Accounts with TAN Number and amount (approx.) as soon as possible.

B. FINANCE & ACCOUNTS – VERIFICATION & CERTIFICATE GENERATION
Step 3 – Review eligibility.
Step 4 – Generate payer-specific child certificate on TRACES.

C. COMMUNICATION TO CLIENT / PAYER
Step 5 – Furnish child certificate.
Step 6 – Raise invoice and pursue collection.

D. PAYMENT RECEIPT & RECONCILIATION
Step 7 – Verification upon receipt of payment.
Step 8 – Update compliance tracker.

E. EXCEPTION MANAGEMENT
Finance and concerned division shall coordinate rectification and monitoring of discrepancies.

 

Regards,

TARA CHAND IFS(RETD)
Director,
Trade Promotion Council of India
9, Scindia House, Connaught Circus,
New Delhi- 110001, India
T: (91) 11 40727272, 9711603400 (mobile)
E: admin1@tpci.in
W: www.tpci.in