Tax exemption Certificate

1. What 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.

2. Procedure for obtaining a TEC:

Step 1: - PAN jurisdiction:


a.    For 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 for TEC:


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:


i. The 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: -


a.    Application letter for obtaining TEC.

b.    Application in Form No. 13.

c.    Letter of authority in favor of M/s G.P. Kapadia & Co., Chartered Accountants.

d.    Declaration-cum-Undertaking.

e.    Check list for documents and information for Section 195/197 of the Income-tax Act, 1961.

f.     Calculation of estimated tax liability on the income, for which TEC is required.

g.    If 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 application.


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 website.

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 TRACES portal.

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.

3. Time frame within which TEC can be obtained:

Once 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 required.


The 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.


Updated 10/2022