The Income Tax Department is preparing new rules that will make it easier for taxpayers to apply for a lower or zero Tax Deducted at Source (TDS) certificate online.
The move is part of the provisions announced in the 2026-27 Budget.
The government informed Parliament on Monday that taxpayers will be able to submit their applications electronically once the new rules are notified.
Taxpayers Can Apply Online for Lower or Zero TDS
Minister of State for Finance Pankaj Chaudhary said in a written reply in the Lok Sabha that Section 395(1) of the Income Tax Act, 2025 allows TDS certificates to be issued at lower or zero rates.
The Finance Act, 2026 has introduced an electronic application option to reduce the compliance burden, especially for small taxpayers. Eligible taxpayers will be able to request a reduced or nil TDS certificate online.
The certificate may be approved or rejected depending on whether the taxpayer meets the required conditions. The government said detailed rules for the process will be notified in due course.
Who Can Benefit From This Facility?
A lower or zero TDS certificate can be useful for taxpayers whose actual tax liability is expected to be lower than the TDS that would normally be deducted from their income.
With this certificate, they can avoid excess tax deductions and may not have to wait until filing their income tax return to claim the extra amount as a refund.
Income Tax Portal Data Will Be Used
Under the Budget amendment, electronic applications are expected to be processed using information already available on the Income Tax portal.
This may include previously filed income tax returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS.
The new online system is expected to make the process simpler and reduce paperwork for taxpayers seeking lower or nil TDS deductions.
