Income Tax rules for online lower, nil TDS certificates to be notified soon

The Income Tax Department is framing rules to implement a provision in the FY27 Budget that will allow taxpayers to electronically apply for certificates for lower or nil tax deducted at source (TDS), 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.

Under an amendment introduced through the Finance Act, 2026, taxpayers will be able to electronically apply for certificates for lower or nil deduction of income tax. The certificates will be issued or rejected subject to conditions prescribed under the rules.

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

Taxpayers typically seek lower or nil TDS certificates when their estimated tax liability is lower than the amount that would otherwise be deducted, helping them avoid excess deductions and the need to claim refunds later.

Under the proposed system, applications will be processed using information already available on the income-tax portal, including previously filed returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS) and Form 26AS. Eligible applications will be processed electronically, while those with discrepancies may be rejected.

The move is aimed at reducing paperwork and physical visits to tax offices while making the process faster, paperless and more transparent.

Chaudhary also said the Income Tax Department disposed of 2.24 lakh appeals in FY26, up from 1.11 lakh in FY24. During the same period, 2.13 lakh faceless assessments were completed in FY26, compared with 2.73 lakh in FY24.

The minister was responding to a question in the Lok Sabha on the number of faceless assessments completed and appeals disposed of by the department over the past three years.

Meanwhile, Chaudhary on Monday said in another written reply to the Lok Sabha that the government realised ₹45,306.05 crore in FY26, comprising ₹16,885.56 crore from disinvestment and ₹28,420.49 crore from asset monetisation. The figures highlight the government's continued reliance on sales of stakes in public sector companies and monetisation of public assets to generate non-tax capital receipts.