I-T Dept framing rules for electronic lower, nil TDS certificate: Govt
New Delhi, Aug 10
The Income Tax Department is framing rules to implement a Budget 2026-27 provision that will allow taxpayers to electronically apply for certificates for deduction of tax at source at lower or nil rates, the government informed Parliament on Monday.
In a written reply to the Lok Sabha, Union MoS for Finance Pankaj Choudhary said Section 395(1) of the Income-tax Act, 2025 provides for issuance of certificates for deduction of tax at source at nil or lower rates.
The minister said the Finance Act, 2026 has enabled taxpayers to electronically file applications for issuance of such certificates, with the certificates to be issued or applications rejected subject to conditions that will be prescribed.
"...the enabling rule is currently under preparation and shall be notified in due course," he said.
A taxpayer generally seeks a lower or nil TDS certificate when the expected tax liability is lower than the amount that would otherwise be deducted at source.
The facility is aimed at preventing excess tax deductions and reducing the need for taxpayers to claim refunds later.
Under the proposed system, taxpayers will be able to apply electronically to the tax authority for a lower or nil TDS certificate.
The application is expected to be processed using information already available with the Income Tax Department, including previously filed tax returns, Annual Information Statement (AIS), Taxpayer Information Summary (TIS) and Form 26AS.
The move is aimed at easing compliance for small taxpayers by reducing paperwork and eliminating the need for physical submission of documents and repeated visits to tax offices. It is also expected to make the process faster, paperless and more transparent.
The minister also provided details on faceless assessments and appeals disposed of by the Income Tax Department. The IT department disposed of 2.24 lakh appeals during 2025-26, compared with 1.11 lakh in 2023-24, he said.
Meanwhile, 2.13 lakh faceless assessments were completed in 2025-26, against 2.73 lakh in 2023-24.
— IANS
Reader Comments
Good move by the government, but I hope the processing is actually fast. Sometimes these "digital" initiatives sound great on paper but ground reality is different. Also, what about taxpayers who are not tech-savvy? The government should ensure there's a support system for senior citizens and small businessmen who may struggle with online applications.
The idea of using AIS, TIS and Form 26AS data to process applications automatically is brilliant. This will reduce human intervention and hopefully eliminate the corruption and delays we often hear about. But let's see how well the implementation goes. I've been burnt before by "seamless" digital initiatives that turned out to be cumbersome. 😅
As a small business owner, this is a relief. Last year, I had to claim a large refund because my client deducted TDS at full rate even though my business was eligible for a lower rate. The whole process of getting the certificate took almost 4 months and multiple visits to the tax office. If this e-system works as promised, it will be a game-changer for people like us. 👍
Good initiative, but the government should also focus on reducing the compliance burden overall. The TDS system itself is quite complex, and lower/nil certificates are just a patch. Also, I hope the processing doesn't rely too heavily on pre-filled data because sometimes the AIS has errors, and if they auto-reject applications based on incorrect data, it will create more problems than it solves.
This is a positive step towards the government's vision of a "faceless
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