Section 400

Section 400: power to relax TDS/TCS provisions

Section 400 gives the Central Government and the Board flexibility to fine-tune the otherwise rigid TDS/TCS machinery - by notification, by binding guidelines, and by rule-making for specific certificate and non-resident-payment scenarios.

This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.

Notified lower rate or no deduction/collection

The Central Government may, by notification, provide that deduction or collection of tax will not be made, or will be made at a lower rate, for specified payments or receipts and specified persons or classes of persons.

Board's binding guidelines

The Board, with the Central Government's prior approval, may issue guidelines to remove any difficulty in giving effect to the provisions of this Chapter. Such guidelines are binding on income-tax authorities and on the person liable to deduct or collect tax, and must be laid before each House of Parliament.

Determining the taxable proportion for non-resident payments

The Board may notify a class of persons or cases where a person paying a non-resident (not being a company) or a foreign company any sum, whether or not chargeable under the Act, must apply to the Assessing Officer to determine the appropriate chargeable proportion of that sum; tax is then deducted under Section 393(2) [Table Sl. No. 17] only on the chargeable proportion.

Rules for lower/nil deduction certificates

The Board may, by notification, make rules specifying the cases and circumstances in which an application for a certificate under Section 395(1) and (3) may be made, the conditions for granting such a certificate, and other connected matters.

Frequently asked questions

Are the Board's guidelines under Section 400(2) binding?

Yes - once issued with the Central Government's prior approval, the guidelines are binding both on income-tax authorities and on the person liable to deduct or collect tax, and are laid before each House of Parliament.