Documents Required for Lower Deduction Certificate: A Complete Guide for NRIs

When it comes to receiving payments in India, especially for Non-Resident Indians (NRIs), TDS (Tax Deducted at Source) often becomes a point of concern. Many NRIs face situations where taxes are deducted at a much higher rate than necessary. This is where a Lower Deduction Certificate (LDC) can help.

In this blog, we’ll explain what an LDC is, why it’s important, and what documents are required for the Lower Deduction Application Process. If you’re searching for LDC experts in Delhi, you’ll also find the right contact details at the end to help you move forward smoothly.

What is a Lower Deduction Certificate?

A Lower Deduction Certificate is a special permission granted by the Income Tax Department of India under Section 197 of the Income Tax Act. It allows the payer (buyer, tenant, or any entity making payment to the NRI) to deduct TDS at a rate lower than the prescribed rate or even at 0%.

This certificate is especially important for NRIs who are involved in transactions such as:

• Sale of property in India
  
  
• Earning rental income from property
  
  
• Earning interest income
  
  
• Selling equity shares or investments
  
  

Without this certificate, the payer may deduct TDS at the maximum applicable rate — which is often unnecessarily high.

Why is an LDC Important for NRIs?

The Lower Deduction Certificate for NRIs ensures that only the actual tax liability is paid and that NRIs don't have to go through the long process of claiming tax refunds later. Some benefits include:

• Avoiding excessive TDS deductions
  
  
• Faster access to funds
  
  
• Compliance with Indian tax laws
  
  
• Reduced stress during financial transactions
  
  

How to Apply for Lower Deduction Certificate

The procedure to apply for LDC involves submitting an application to the Assessing Officer (AO) with relevant documents to justify the request. Once the application is verified and approved, the AO issues the certificate, which the NRI can then share with the payer.

Let’s break it down:

Procedure to Apply for LDC (Lower Deduction Certificate)

Here’s a step-by-step guide on the Lower Deduction Application Process:

1. Determine the nature of transaction
   Understand whether the income qualifies for lower deduction – e.g., capital gains from property, rental income, interest, etc.
   
   
2. Prepare necessary documents (see list below)
   
   
3. Submit Form 13
   This is the prescribed form under the Income Tax Rules for applying for a Lower Deduction Certificate. It can be filed online via the income tax portal.
   
   
4. Follow up with Assessing Officer (AO)
   The AO may request additional documents or seek clarification before issuing the certificate.
   
   
5. Receive the LDC
   Once approved, the certificate is issued and can be presented to the payer to ensure deduction at the approved lower rate.
   
   

Documents Required for Lower Deduction Certificate

To successfully apply for a Lower Deduction Certificate for NRI, the following documents are typically required:

1. PAN Card

A valid PAN card is mandatory for tax-related filings in India.

2. Passport and Visa

Proof of NRI status through a copy of passport and visa or overseas resident card.

3. Sale Deed / Agreement (in case of property transaction)

If you are selling a property, the signed agreement or sale deed is required.

4. Purchase Documents

Proof of purchase including original cost of the property, stamp duty, and registration.

5. Capital Gains Calculation Sheet

Computation of capital gains or expected profit from the transaction.

6. Bank Statements

Relevant bank statements showing payment receipts or investments.

7. Proof of Tax Paid (if any)

Any taxes already paid such as advance tax or previous TDS details.

8. Projected Income Statement

A financial forecast or projection of the income expected from the transaction.

9. Form 13

Filled and signed copy of the application form.

10. Authorization Letter (if applying through consultant)

If you are applying through a professional or LDC expert in Delhi, a signed authorization letter is needed.

Expert Help: LDC Experts in Delhi

Filing for a Lower Deduction Certificate can be time-consuming and confusing, especially for NRIs unfamiliar with Indian tax laws. This is why many people choose to work with experienced professionals. At Springhouse, we specialize in helping NRIs:

• File Form 13 with all required documents
  
  
• Liaise with the Assessing Officer
  
  
• Handle objections and queries from the IT department
  
  
• Obtain the certificate quickly and smoothly
  
  

Whether you’re selling property or earning income in India, our experts guide you through the entire Lower Deduction Application Process so you don’t pay more tax than required.

Common Mistakes to Avoid When Applying for LDC

• Submitting incomplete documents
  Missing even one document can delay your application significantly.
  
  
• Incorrect capital gains calculations
  Misreporting the gains can lead to rejection or incorrect TDS rate determination.
  
  
• Delaying the application
  Applying for LDC after the transaction can lead to unnecessary TDS deductions.
  
  
• Not consulting a professional
  Indian tax laws are complex. A professional can help avoid costly errors.
  
  

Conclusion

Obtaining a Lower Deduction Certificate for NRIs is not just about reducing tax — it’s about ensuring legal compliance and protecting your financial interests. With proper documentation and guidance, the procedure to apply for LDC becomes much simpler.

If you’re looking for trusted LDC experts in Delhi who can help you with every step of the process, from document preparation to coordination with tax authorities, Springhouse is here to assist you.

Contact Us

639A, B-1 Block, Janakpuri,
New Delhi-110058, India
📞 +91-9711323533
📧 rahul@rpareva.com