Section 197B of the Income-tax Act, 1961: Lower TDS for a Limited Period
Section 197B was a special temporary provision that reduced specified rates of tax deduction at source to three-fourths of the normal statutory rate for deductions required from 14 May 2020 to 31 March 2021. It was introduced as a COVID-19 relief measure and does not provide a continuing TDS concession for current payments.
Meaning and purpose of Section 197B
Section 197B of the Income-tax Act, 1961 was titled "Lower deduction in certain cases for a limited period." It was inserted with effect from 14 May 2020 by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
The provision was designed to reduce the amount of tax withheld from specified payments during the prescribed COVID-19 relief period. Instead of changing each individual TDS section, Section 197B applied a temporary overriding rule to the listed provisions.
What Section 197B provided
Where any of the TDS provisions specified in Section 197B required deduction of tax during the period beginning on 14 May 2020 and ending on 31 March 2021, tax was to be deducted at a rate equal to three-fourths of the rate otherwise specified in the relevant section.
TDS provisions covered by Section 197B
The section expressly referred to Sections 193, 194, 194A, 194C, 194D, 194DA, 194EE, 194F, 194G, 194H, 194-I, 194-IA, 194-IB, 194-IC, 194J, 194K, 194LA, Section 194LBA(1), Section 194LBB clause (i), Section 194LBC(1), Section 194M and Section 194-O.
| Feature | Section 197B rule |
|---|---|
| Nature of provision | Temporary reduction in specified TDS rates |
| Starting date | 14 May 2020 |
| Ending date | 31 March 2021 |
| Reduced rate | Three-fourths, or 75 percent, of the rate specified in the covered TDS provision |
| Current use | Historical provision relevant to deductions falling within the statutory period and related proceedings |
How the temporary lower TDS rate worked
The provision did not create a separate application or certificate procedure. Its rate reduction operated through the statute for covered deductions made during the specified period. The underlying TDS section continued to determine whether tax had to be deducted; Section 197B temporarily modified the rate for the listed provisions.
Section 197B must also be distinguished from the former Section 197. Section 197 dealt with a taxpayer-specific certificate for deduction at a lower rate or no deduction, whereas Section 197B itself imposed a temporary statutory rate reduction for the specified period and covered provisions.
Current position from 1 April 2026
The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961, subject to the statutory repeal and savings framework. The 2025 Act reorganises the TDS provisions under the new structure. The exceptional COVID-period reduction created by former Section 197B remains relevant historically where the tax deduction event or dispute concerns the period from 14 May 2020 to 31 March 2021.
For a payment or credit arising under current law, the applicable TDS provision and rate under the Income-tax Act, 2025, the Income-tax Rules, 2026 and any relevant current notification should be checked. The 75 percent rate mechanism in former Section 197B should not be applied merely because the payment is of a type that was once listed in that section.
Official legal sources
For the authoritative historical text, see the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the Income-tax Act, 1961 official text. For present law, see the Income-tax Act, 2025 and the Income Tax Department 2025 Act and 2026 Rules portal.
Updated: 29 September 2026. This article explains Section 197B primarily as a historical limited-period TDS provision. For current transactions, verify the provision and rate applicable to the relevant tax year and payment.