Lower or nil TDS certificates to go fully online soon, rules being framed
New rules are being prepared for electronic applications for lower TDS certificates. Taxpayers can soon apply online for reduced or nil tax deductions. This initiative aims to ease compliance burdens for small taxpayers. The Income Tax department disposed of many appeals in the last fiscal year. Faceless assessments were also completed, though fewer than previously.
The Income Tax Department is set to streamline the process for taxpayers seeking lower or nil Tax Deducted at Source (TDS) certificates, according to a written reply by Minister of State for Finance Pankaj Chaudhary. Introduced under the newly enacted Income-tax Act, 2025, the enabling rule aims to simplify compliance for small taxpayers by allowing electronic applications.
Previously, taxpayers had to rely on physical documentation or visit tax offices to request these certificates. However, with the upcoming rules, applications will be processed electronically, utilizing data already available in the Income Tax Department's systems, such as previously filed tax returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS), and Form 26AS.
To qualify for a lower or nil TDS certificate, taxpayers must demonstrate that their final tax liability is expected to be lower than the TDS that would otherwise be deducted. This provision helps avoid excessive deductions and the subsequent need for refund claims.
In FY26, the department processed 2.24 lakh appeals and completed 2.13 lakh faceless assessments, compared to 1.11 lakh appeals and 2.73 lakh assessments in FY24. These figures demonstrate the department's increased efficiency in handling taxpayer queries and resolving disputes.
The change in rules is expected to benefit taxpayers by reducing the hassle and time associated with obtaining lower or nil TDS certificates, while also helping the government collect the correct amount of tax.
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