I-T Rules For Online Application Of Lower, Nil TDS Certificates To Be Notified Soon: Mos Finance

The Income Tax department is currently in the process of framing rules to implement the 2026-27 Budget provision that allows taxpayers to electronically apply for lower or nil TDS certificates electronically, Parliament was informed on Monday.

Minister of State for Finance Pankaj Chaudhary said Section 395(1) of the Income-tax Act, 2025 provides for the issuance of certificates for deduction of tax at source at Nil or lower rates. Vide Finance Act, 2026, to ease the compliance burden of small taxpayers, an option has been enabled for the payee, to file the application for issuance of certificates for lower or nil deduction of income-tax electronically and the certificate may be issued or rejected subject to fulfilment of conditions as may be prescribed.

"... the enabling rule is currently under preparation and shall be notified in due course," Chaudhary said in a written reply in the Lok Sabha.

A taxpayer typically applies for a lower or nil TDS certificate when their actual tax liability is expected to be lower than the amount of TDS that would otherwise be deducted, thereby avoiding excess tax deductions and the need to claim a refund later.

Under the amendment proposed in FY27 Budget, taxpayers would be able to electronically apply for a lower TDS certificate before the tax authority. The application will be processed based on information already available on the income-tax portal, including previously filed returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS) and Form 26AS.

If the prescribed conditions are met, the certificate will be issued electronically. Applications with discrepancies may be rejected.

The proposed provision would eliminate physical documentation, repeated visits to tax offices, make the process faster, paperless and more transparent.

Chaudhary further said the income tax department has disposed off 2.24 lakh appeals in 2025-26 fiscal, up from 1.11 lakh in 2023-24. Also, 2.13 lakh faceless assessments were completed in FY26, lower than 2.73 lakh in FY24.

The minister was replying to a question on the number of faceless assessments and appeals disposed of during the last three years.