is a TEC?
TEC is a certificate
issued by the Assessing Officer (“AO”) for the benefit of an Assessee,
generally addressed to the payer of income. TEC authorizes the payer [who
generally deducts tax at source at the highest prescribed rate in the
Income-tax Act, 1961 (“Act”) i.e., 31.2%] to deduct tax at a lower or nil rate
as the case may be, from the NRI’s income.
The Act has provided
procedure under section 197, whereby an Assessee can apply
to the AO (in prescribed form)
requesting him/ her to issue a certificate authorizing payer of the income to
deduct tax at a lower or nil rate as the case may be.
As per the Act, for
making an application to the AO, the Assessee is required to estimate his/ her
income in India, tax liability on the said income and likely TDS on the same.
Basis the estimations of the said details, application for TEC can be made to
the AO. In cases, where the AO has issued a TEC, the payer is obligated to
deduct tax in accordance with such TEC unless it is cancelled by the AO. Such a
certificate would be binding on the payer.
Validity of the TEC
is mentioned in the certificate and AO generally issues TEC for one financial
year (being April 1 to March 31) only.
for obtaining a TEC:
Step 1: - PAN jurisdiction:
obtaining TEC from the Income Tax Department (ITD), initially we need to check the Income Tax jurisdiction of
NRI, basis the PAN allotted to him/her. In India,
all the Assessee are given separate jurisdiction as per their surname, sources of income,
residential address etc.
b. It shall
be noted that all the NRIs should be assessed at the International Taxation
(Int. tax) ward of ITD. Therefore, in your case, if the NRI’s jurisdiction is
not in Int. tax ward then we will have to apply for migration of his/her PAN to
the relevant Int. tax ward. Further note, the process of PAN migration takes
about 15-20 working days after making the application to the AO.
c. Once his/her PAN gets migrated to Int. tax
ward, the process of TEC application shall be initiated from our end.
Step 2: - Application
1. Please note application for TEC is now
required to be made online through TRACES portal.
2. Hence, to begin with the TEC process
asseesee’s PAN is required to be registered on the TRACES portal.
3. Once the asseesee’s PAN is registered on the
TRACES portal, we shall begin with the TEC process as under:
documents/information required to obtain TEC, shall be dependent upon
the income for which a TEC needs to be obtained (eg: Rental income,
sale of immovable property etc.) (We shall be happy to share the
list of documents required, upon complete understanding facts of your case.
Accordingly, based on the details and information received from the NRI, we
will prepare the following documents: -
letter for obtaining TEC.
in Form No. 13.
of authority in favor of M/s G.P. Kapadia & Co., Chartered Accountants.
list for documents and information for Section 195/197 of the Income-tax Act,
of estimated tax liability on the income, for which TEC is required.
the NRI has not filed income tax returns for last 3 Assessment Years (AYs),
he/she is required to submit estimated computation of income for last 3 AYs
along with estimated computation of income for Current AY while making the TEC
ii. The above documents shall be emailed to the NRI for his/her review.
iii. After his/her confirmation, he/she shall print, sign and courier the documents
as listed in point c, d, e and g above to us.
iv. On receipt of all the relevant documents, we shall make
an online submission of Form-13 alongwith the supporting documents on TRACES
v. Once the TEC is
uploaded, the tax jurisdiction will be allotted to by CPC where asseesee’s TEC
application will be processed within 2-3 working days. Usually, it is the same
as the asseesee’s actual Income-tax Jurisdiction. However, in case the
jurisdiction allotted by CPC is not the same as the asseesee’s actual tax
jurisdiction we will have to migrate the asseesee’s PAN. This process can take
upto working 4-5 days.
vi. The AO shall
review our application of TEC and may raise requirement of few additional
details and/or documents.
vii. In case of additional requirements
by AO, we shall have to
make the necessary submission along with the additional details online.
viii. Once the AO is satisfied with our submission and
has all the details required, he will issue the TEC order by uploading on
ix. Once TEC order is
uploaded, we shall download the same and share it with you via email so that
you can forward it to your payer.
frame within which TEC can be obtained:
all the relevant details and documents are received from client’s end, normally
it takes around 45 to 60
working days to obtain the TEC from ITD.
In case, PAN migration is also
involved, we can start the TEC process and PAN migration process
simultaneously. However, additional time of about 15-20 working days will be
timelines mentioned above are conservative. We can try and expedite obtaining
TEC if all the documents are in order subject to satisfaction of the Assessing
Officer. However, we cannot give any assurance that the certificate shall be
issued within the stipulated time, as it solely depends on the AO’s discretion.