Income Tax Department to move lower/nil TDS certificates online as new rules are framed

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 ProvisionSection 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.ITR Deadline Is Not July 31 For Everyone, Know - Who Gets Extra Time And Why?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 ProcessThe online facility is expected to reduce paperwork and repeated visits to tax offices. It could also make the process quicker, paperless and more transparent.ITR Filing Deadline Nears, Income Tax Department Asks Taxpayers To Reconcile Records And Avoid Last-Minute RushChaudhary 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.

The proposed system will allow taxpayers to apply electronically, with applications processed using information from the income-tax portal, AIS, TIS and Form 26AS.