Chhajer Yash & Co.

Tax Exemption Certificate

A TEC is what stops your buyer or tenant from withholding tax at the maximum rate on your Indian income. Getting one takes real lead time, so applying early matters.

Capital Gains & Remittances

Capital Gain on Sale/Transfer of Immovable Properties

Capital Gains Tax Exemptions on Reinvestment

Tax Exemption Certificate

Set-off and Carry Forward of Losses

A TEC is what stops your buyer or tenant from withholding tax at the maximum rate on your Indian income. Without one, whoever pays you is legally required to deduct at the highest prescribed rate, 31.2% or 12.5% depending on the income type, regardless of your actual liability. With one, they deduct at the lower or nil rate the tax department has specifically authorized.

How it works

Under Section 197, you apply to your Assessing Officer, estimating your income in India, your tax liability on it, and the TDS that would otherwise apply. If the AO is satisfied, they issue a certificate binding the payer to deduct at the rate specified, valid for one financial year only.

Step one: your PAN needs to sit in the right jurisdiction

All NRIs should be assessed under the International Taxation ward. If your PAN currently sits elsewhere, it needs to be migrated first, a separate process taking roughly 15 to 20 working days, before the TEC application can even begin.

Step two: the application runs through TRACES

Your PAN needs to be registered on TRACES first. The application itself is Form 13, along with an application letter, a letter of authority for whoever is filing on your behalf, a declaration-cum-undertaking, and your estimated tax computation. If you have not filed returns for the last 4 assessment years, you will also need estimated income computations for each of those years plus the current one.

What happens after submission

The tax jurisdiction gets allotted by CPC, usually matching your actual jurisdiction, if not, another PAN migration may be needed, adding 4 to 5 more working days. The AO reviews the application, may request additional details, and once satisfied, uploads the TEC order to TRACES for you to download and forward to your payer.

Realistic timeline

Roughly 45 to 60 working days once all your documents are in order, longer if PAN migration is also needed. This depends entirely on the AO’s discretion, there is no guaranteed turnaround, so applying well before you need the certificate matters.

FAQs: Tax Exemption Certificate

How long is a TEC valid for?

Generally one financial year, so you need a fresh certificate each year if you continue earning the same type of income.

My PAN isn’t under the International Taxation ward. Does that block my TEC application?

It delays it rather than blocking it, migration needs to happen first, adding roughly 15 to 20 working days before the TEC process itself can start.

Can I guarantee my TEC will be issued within 45 days?

No, that is a realistic estimate assuming your documents are in order, actual timing depends entirely on the Assessing Officer’s discretion and workload.

What happens if the payer doesn’t honor my TEC?

The certificate is legally binding on the payer once issued, unless it has been cancelled by the AO, they are required to deduct at the specified rate.

I haven’t filed returns for the past 3 years. Can I still apply for a TEC?

Yes, but you will need to submit estimated income computations for the last 4 assessment years plus the current one as part of your application.

Last updated on 27 July 2026