TaxTMI 
TaxTMI 
Tracking LDC Limits When AO Issues Certificates to deductor- blanket LDC
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....racking LDC Limits When AO Issues Certificates to deductor- blanket LDC<br> Query (Issue) Started By: - Ramanathan Seshan Dated:- 28-4-2025 Last Reply Date:- 29-4-2025 Income Tax<br>Got 2 Replies<br>Income Tax<br>Dear Experts, Some Assessing Officers (AOs) are issuing Lower Deduction Certificates (LDCs) addressed to "all persons responsible for deducting tax" without mentioning of our TAN. In suc....
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....h cases, how can we track the LDC limit effectively? Also, how can we monitor whether the vendor has exceeded the specified LDC limit? Regards, S Ram Reply By YAGAY andSUN: The Reply: Great question - and this is a real challenge in practical TDS compliance. When Lower Deduction Certificates (LDCs) under Section 197 are issued generically (i.e., addressed to "all persons responsible for deduct....
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....ing tax" and not linked to your TAN), it becomes your responsibility as the deductor to: ✅ How to Track LDC Limits in Such Cases: 1. Request Declaration from the Vendor Ask the vendor to provide a declaration that includes: * Copy of the LDC * Total limit sanctioned under the LDC (if any) * Transactions already covered under that limit * Remaining available limit * Confirmation ....
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....that your invoice falls within the remaining limit 👉 This is essential for your internal documentation and defense during tax scrutiny. 2. Reconcile with Vendor Monthly Set up a monthly or quarterly reconciliation with the vendor: * Maintain a shared register (Excel or system-based) * Each invoice/payment under LDC is logged * Vendor confirms that payments are within approved thre....
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....shold 3. Monitor Using TRACES (if linked to PAN) Although the LDC is not TAN-specific, the vendor's PAN is central to LDC issuance. * You can use the TRACES portal to validate: * The LDC PAN-wise (under '197 Certificate Validation') * Status of the certificate * But you won't see limit utilization, unless the vendor cooperates 4. Internal LDC Tracking Register Maintain a separa....
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....te internal register per LDC, including: Vendor Name PAN LDC No. LDC Validity Limit (Rs.) Amount Paid So Far Balance Remaining 5. Include LDC Limit Clause in Agreement Add a clause in your vendor agreement: * Vendor to inform immediately if their LDC limit is exhausted * Indemnification if excess payments are later subject to disallowance or interest due to insufficient LDC limit ....
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....0071; Important Note: If you deduct at lower/no rate after LDC limit is exhausted, you're liable for: * Short deduction interest under Section 201(1A) * Disallowance of expense under Section 40(a)(ia) Summary: To effectively monitor LDC limits when not TAN-specific: * Get vendor declarations and do regular reconciliations. * Maintain an internal LDC register. * Use TRACES to valid....
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....ate certificate existence (but not limit usage). * Include protective clauses in agreements. *** Reply By Ramanathan Seshan: The Reply: Dear Yagay-sir, Thanks for your valuable response. Regards, S Ram<br> Discussion Forum - Knowledge Sharing ....