Want to apply for Nil or lower TDS certificate online? Govt to notify new rules soon

The Government will soon notify news rules to enable online application of lower or nil TDS certificates soon, according to the Finance Ministry.

Union Minister of State for Finance, Pankaj Chaudhary, on Monday, August 10, 2026, said the Income Tax department is currently in the process of framing rules to implement the Budget 2026 provision that allows taxpayers to electronically apply for lower or nil TDS certificates electronically.

Chaudhary's statement came in the Lok Sabha in a written reply to a query. Here's what the minister said:

"Section 395(1) of the Income-tax Act, 2025 provides for issuance of certificate for deduction of tax at source at Nil or lower rates. Vide Finance Act, 2026, to ease the compliance burden of small taxpayers, an option has been enabled for the payee, to file the application for issuance of certificate for lower or nil deduction of income-tax electronically and the certificate may be issued or rejected electronically subject to fulfilment of conditions as may be prescribed. In this regard, the enabling rule is currently under preparation and shall be notified in due course."

Who can apply for lower on Nil TDS certificate?

A taxpayer can apply for a lower or nil TDS certificate when his/her actual tax liability is expected to be lower than the amount of TDS that would otherwise be deducted. This provision of the Income-Tax Act helps in avoiding excess tax deductions and the need to claim a refund later. The provision is especially beneficial for small taxpayers.

The application to obtain the Nil or Lower TDS certificate can be filed by any person, i.e., resident, non-resident, individual, firm, domestic company, foreign company, etc.

"An assessee can apply to the Assessing Officer to issue a nil or lower TDS certificate. Such certificate is issued if the estimated tax liability of the assessee justifies no deduction of tax or deduction of tax at a lower rate," the Income Tax Department says on its website.

Which incomes are eligible for nil or lower TDS?

Taxpayers can apply for nil or lower TDS with respect to a host of incomes, including salaries, interest on securities, dividend, interest other than interest on securities, payment to contractors, insurance commission, commission on sale of lottery tickets, commission or brokerage, rent, fees for professionals or technical services, payment of any other income to a non-resident, etc.

What changed under Finance Act 2026

As per Finance Act 2026, taxpayers would be able to electronically apply for a lower TDS certificate before the tax authority. The application form will be processed based on information already available on the income-tax portal, including previously filed returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS) and Form 26AS.