What Is Form 128? A Complete Guide Under the New Income Tax Rules, 2026
As per the new income tax rules, the application must be furnished electronically to the Director General of Income-tax (Systems) or any person authorized on their behalf.
The new income tax Form 128, introduced through Income Tax Rules, 2026 corresponding to the old Form 13 for the purpose to apply for a certificate authorizing the payer to deduct tax at a lower or nil rate/collect tax at a lower rate. The taxpayer has to furnish Form No. 128 instead of Form 13 (which is old) to apply for a certificate authorizing the payer to deduct tax at a lower...
The new income tax Form 128, introduced through Income Tax Rules, 2026 corresponding to the old Form 13 for the purpose to apply for a certificate authorizing the payer to deduct tax at a lower or nil rate/collect tax at a lower rate.
The taxpayer has to furnish Form No. 128 instead of Form 13 (which is old) to apply for a certificate authorizing the payer to deduct tax at a lower or nil rate/collect tax at a lower rate under section 395(1)/395(3) of the Income- taxAct, 2025.
As per the new income tax rules, the application must be furnished electronically to the Director General of Income-tax (Systems) or any person authorized on their behalf.
WHO SHOULD FILE FORM 128
For income that is subject to tax deduction at source (TDS), such as interest, commissions, professional fees, contract payments, rent, or other specified income, any person (resident or non-resident) seeking a certificate for no deduction of tax or deduction or collection of tax at a lower rate under section 395(1) (for TDS) or section 395(3) (for TCS) of the Income-tax Act, 2025 may submit an application using Form No. 128.
DUE DATE
Form No. 128 may be submitted at any point throughout the tax year for which the certificate is requested in accordance with the new regulations. After approval, the certificate will be valid for the time limit stated in the certificate or until the Assessing Officer withdraws or modifies it.
DOCUMENTS/ DETAILS REQUIRED TO FILE THE FORM NO. 128
- PAN of the applicant.
- Details of the payer(s) including TAN for Annexure-I & III.
- Estimated income and tax computation for the period.
- Last 4 years’ ITRs, Audit Reports, financial statements, or other supporting financial data (if required).
- Details of advance tax paid, TDS/TCS credits available.
STRUCTURE OF FORM NO. 128
Part A: Details of Applicant - Name, Address, Status, PAN, Residential Status and Contact Details.
Part B: 1. Application filed by - Registered non-profit organisation / Specified Entity referred to in Section 263(9)(c) / Person carrying on business or profession / Person other than the above.
2. Details of Request
Part C: Details of existing tax liabilities & Particulars of income and other relevant details
Part D: Declaration for Registered non-profit organisation or Specified Entity referred to in Rule 213
Part E: Declaration for the person other than person mentioned in Part D
Part F: Verification
Annexure-I: Applicable for TDS
Annexure-II: Applicable where TDS involves over 100 deductors and their details are not available at the time of application.
Annexure-III: Applicable for TCS
Also read: Income Tax Act, 2025Retains Disability Pension Exemption for Armed Forces; Govt Denies WithdrawalClaims
HOW TO FILE FORM NO. 128
The process flow includes following steps:
First step: Login to the TRACES Portal
Secondly, go to TRACES login and then Dashboard, where you can find e-file and view.
Thirdly, find File Forms and select Form No. 128
As the next step, fill the Online Form and upload Supporting Documents
Further, E-Verify and Submit the Form and the application will be processed by the AO/automated system.
After approval, the lower deduction/collection or nil deduction certificate becomes available for download and sharing with the payer.
For the Applicant (Deductee/Collectee): After processing Form 128, the taxpayer may receive an electronic certificate for lower or nil TDS/TCS under section 395. This can be shared with payers to ensure correct deduction. It prevents excess tax deduction, improves cash flow, and reduces refund claims, while enabling deductors/collectors to apply accurate rates through system-based verification.
For the Payer (Deductor/Collector): Once Form 128 is processed, the deductor/collector can verify the certificate electronically and apply the approved lower or nil TDS/TCS rate for covered payments during its validity. It ensures accurate reporting and credit. Any modification, withdrawal, or expiry requires updating the applicable tax rate accordingly.
CHANGES MADE
The government has made qualitative changes to the form. A few are given below:
1. Categorisation of Applicants
Form 128 classifies applicants into four categories Non-Profit Organization, Specified Entity, Business/Profession, and Others for better data capture.
2. Category-Based Annexures
Relevant annexures and declarations apply based on selected categories, reducing unnecessary compliance.
3. Child Certificate Provision
The certificate may be issued in the applicant's name authorizing him to:
(a) receive specified payments at the appropriate rate of deduction; and
(b) generate the appropriate certificate and provide it to the person responsible for deducting tax,
if the number of individuals responsible for deducting the tax is likely to exceed 100 and the applicant does not have the details of these individuals at the time of application.
4. Separate Box
Fields like Name, Designation, Address, and PAN have been separated into distinct boxes to eliminate system-related anomalies.
5. Tax Year
Assessment / Financial / Previous year or years have been replaced with Tax year or years, wherever appearing in the Form/Annexure.
6. Alignment with Income Tax Act, 2025
Changes in Sections, Clauses and Schedules in the Form 128 have been aligned as per the Income-tax Act, 2025.
7. Change in Currency Symbol
Currency symbol “Rs.” has been replaced with “₹”.
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