New Delhi: The Income Tax Department is preparing rules that will allow taxpayers to apply online for certificates permitting tax deduction at source (TDS) at a lower or nil rate, Parliament was informed on Monday.
Minister of State for Finance Pankaj Chaudhary said the enabling rule is under preparation and will be notified in due course. He shared the update in a written reply in the Lok Sabha.
Budget Provision
Section 395(1) of the Income-tax Act, 2025 allows the issuance of certificates for TDS at lower or nil rates.
The Finance Act, 2026 introduced an online application option to reduce the compliance burden on small taxpayers.
Once the rules are notified, a payee will be able to electronically seek a certificate from the Income Tax Department.
The certificate may be approved or rejected depending on whether the taxpayer meets the prescribed conditions.
Who Benefits?
A taxpayer usually seeks such a certificate when the expected tax liability is lower than the TDS that would otherwise be deducted.
The certificate can prevent excess tax deductions and reduce the need to wait for a refund after filing the income-tax return.
Under the proposed system, applications will be checked using information already available on the income-tax portal.
This may include previously filed returns, the Annual Information Statement, Taxpayer Information Summary and Form 26AS.
Eligible applicants will receive certificates electronically. Applications containing mismatched information or other problems may be rejected.
Faster Process
The online facility is expected to reduce paperwork and repeated visits to tax offices. It could also make the process quicker, paperless and more transparent.
Chaudhary also shared data on faceless assessments and appeals. The department disposed of 2.24 lakh appeals in 2025-26, compared with 1.11 lakh in 2023-24.
Meanwhile, 2.13 lakh faceless assessments were completed in FY26, lower than the 2.73 lakh assessments completed in FY24.
The minister was responding to a question seeking details of faceless assessments and appeals handled over the last three financial years.
