Lower or nil TDS certificates to go fully online soon

The Income Tax Department is set to digitize the process of applying for lower or nil tax deducted at source (TDS) certificates, according to Minister of State for Finance Pankaj Chaudhary. The move aims to simplify compliance for small taxpayers. Under the Income-tax Act, 2025, individuals can request certificates that allow TDS to be deducted at a reduced rate or not at all.

Currently, the enabling rule is in preparation and is expected to be notified soon. Taxpayers will then be able to file applications electronically, utilizing data already on record with the Income Tax Department, such as tax returns, Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS. If the conditions are met, the certificate will be issued online, and applications with mismatched information may be rejected.

This initiative is particularly useful for taxpayers who anticipate a lower final tax liability than the TDS that would otherwise be deducted, thus preventing unnecessary deductions and the need for a refund claim later. In addition to streamlining TDS certificate applications, the Income Tax Department has shown efficiency in handling taxpayer appeals and faceless assessments.

In the fiscal year 2026, it resolved 2.24 lakh appeals compared to 1.11 lakh in 2024, and completed 2.13 lakh faceless assessments against 2.73 lakh in the previous fiscal year.