Govt To Soon Notify Rules For Online Lower Or Nil TDS Certificate Applications: MoS Finance

New Delhi, Aug 10 (KNN) The Income Tax Department is in the process of framing rules to implement a key provision from the Union Budget 2026–27 that will allow taxpayers to apply electronically for certificates authorising lower or nil deduction of tax at source (TDS), Minister of State for Finance Pankaj Chaudhary said.

Chaudhary informed Parliament on Monday that under Section 395(1) of the Income-tax Act, 2025, taxpayers can obtain certificates allowing deduction of tax deducted at source (TDS) at reduced or nil rates. He added that the Finance Act, 2026 has further simplified the process by introducing an electronic application system aimed at reducing compliance burdens, particularly for small taxpayers, PTI reported.

The detailed rules enabling this system are currently being prepared and are expected to be notified soon.

Simplifying Compliance Through Digital Processes

The proposed system will allow taxpayers to submit applications online without the need for physical documentation or repeated visits to tax offices. 

The application will be evaluated using data already available on the income-tax portal, including previously filed income tax returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS.

Once the application is submitted, the tax authorities will review it based on prescribed conditions. If all criteria are met, the certificate will be issued electronically. In cases where discrepancies are identified, the application may be rejected. This digital process is expected to make the system faster, more transparent, and entirely paperless.

Purpose and Benefits for Taxpayers

Taxpayers typically apply for lower or nil TDS certificates when their actual tax liability is expected to be less than the amount that would otherwise be deducted at source. By obtaining such a certificate, they can avoid excess tax deductions and the subsequent need to claim refunds. The new electronic system is designed to streamline this process and improve overall taxpayer convenience.

Progress in Appeals and Assessments

In addition to these reforms, the government also shared data on tax administration performance. 

During the financial year 2025–26, the Income Tax Department disposed of approximately 224,000 appeals, a significant increase compared to 111,000 appeals in 2023–24. At the same time, 213,000 faceless assessments were completed in FY26, which is lower than the 273,000 assessments completed in FY24.

(KNN Bureau)