E- Certification System for NIL/Less TDS under new Income Tax to Begin from April 1, 2026: Finance Ministry
By allowing payees to electronically submit their applications through Form 128 to a designated income-tax authority, the new amendment offers an online alternative.
An electronic certification system for granting NIL or lower Tax Deducted atSource (TDS), scheduled to take effect from April 1, 2026, confirmed the Finance Ministry in its reply to the Lok Sabha question. The Minister of State in the Ministry of Finance Pankaj Chaudhary, in his written reply to the question of MP Kalyan Banerjee stated that the existing provisions governing issuance...
An electronic certification system for granting NIL or lower Tax Deducted atSource (TDS), scheduled to take effect from April 1, 2026, confirmed the Finance Ministry in its reply to the Lok Sabha question.
The Minister of State in the Ministry of Finance Pankaj Chaudhary, in his written reply to the question of MP Kalyan Banerjee stated that the existing provisions governing issuance of such certificates have been amended through the FinanceBill, 2026 to enable an option for electronic issuance of NIL/lower TDS certificates.
The Government clarified that the detailed rules and operational framework for the e-certification system will be finalized after the Finance Bill, 2026 is passed and enacted into law.
It is anticipated that once the system is put into place, it will enable speedier processing, lessen the burden of compliance, and minimize discretion in the issuance of such certifications.
To get these certifications, taxpayers must physically visit an Assessing Officer as per the current structure of Section 395 of the Income-tax Act, 2025. By allowing payees to electronically submit their applications through Form 128 to a designated income-tax authority, the new amendment offers an online alternative.
Following submission of an application via the new electronic channel, the tax authority will do a digital verification. The authority may grant a certificate allowing a reduced tax rate or no deduction at all if the applicant satisfies the requirements and the supporting documentation is complete.
FORM 128 : Application for issuance of certificate for lower/nil deduction of Income- tax and lower collection of Income-tax under section 395(1) and 395(3) of the Income-tax Act, 2025
Name of the Form
As per Income Tax Rules, 1962 : Form 13
As per Income Tax Rules, 2026 : Form 128
Section under Income Tax Act
Income Tax Act, 1961: Section 197/206C(9)
Income Tax Act, 2025: Section 395(1)/395(3)
Rules under Income Tax Rules
As per Income Tax Rules, 1962: Rules 28, 28AA, 28AB, 29, 37G & 37H
As per Income Tax Rules, 2026: 213
Taxpayers can now use Form No. 128 to apply for a lower or NIL tax deduction certificate under Section 395 of the Income-tax Act, 2025. This application must be submitted electronically to the Director General of Income-tax (Systems), replacing the traditional manual process with a faster, digital-first approach.
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