New Delhi: The Income Tax Department is currently framing rules to implement a 2026-27 Budget provision that allows taxpayers to apply electronically for lower or nil TDS certificates, Parliament was informed on Monday.
Minister of State for Finance Pankaj Chaudhary said Section 395(1) of the Income-tax Act, 2025 provides for the issuance of certificates for deduction of tax at source at nil or lower rates.
Through the Finance Act, 2026, an option has been enabled for payees to file applications electronically for certificates allowing lower or nil deduction of income tax. The certificate may be issued or rejected subject to conditions that will be prescribed.
"… the enabling rule is currently under preparation and shall be notified in due course," Chaudhary said in a written reply in the Lok Sabha.
A taxpayer typically applies for a lower or nil TDS certificate when their actual tax liability is expected to be lower than the amount of TDS that would otherwise be deducted. This can help avoid excess tax deductions and the need to claim a refund later.
Under the amendment proposed in the FY27 Budget, taxpayers will be able to electronically apply for a lower TDS certificate before the tax authority.
The application will be processed using information already available on the income-tax portal, including previously filed returns, the Annual Information Statement (AIS), Taxpayer Information Summary (TIS) and Form 26AS.
If the prescribed conditions are met, the certificate will be issued electronically. Applications with discrepancies may be rejected.
The proposed provision is expected to eliminate physical documentation and repeated visits to tax offices, while making the process faster, paperless and more transparent.
Chaudhary further said the Income Tax Department disposed of 2.24 lakh appeals in the 2025-26 financial year, up from 1.11 lakh in 2023-24.
A total of 2.13 lakh faceless assessments were completed in FY26, compared with 2.73 lakh in FY24.
The minister was responding to a question on the number of faceless assessments and appeals disposed of during the last three years.