Lower Deduction Certificate

A Lower Tax Deduction Certificate (LTDC) is a document issued by the income tax department in certain countries, including India, that allows a taxpayer to pay a lower rate of tax deduction at source (TDS) on their income. The certificate is issued to individuals who are likely to have a tax liability lower than the TDS rate prescribed by the government.

For instance, if an individual's taxable income for a financial year is below the basic exemption limit, they can apply for an LTDC to the income tax department. Once the certificate is issued, the employer or any other deductor of TDS would then deduct tax at a lower rate, which would provide the individual with more disposable income on a monthly basis.

An LTDC is typically valid for a single financial year, and the taxpayer needs to renew it every year if they want to continue availing the benefit of lower TDS.

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