Income-Tax Act 2025: What Is A Child Certificate And Who Needs To Generate It?

A new compliance process under the Income-tax Act, 2025 has introduced the term “child certificate” for taxpayers seeking lower or nil deduction of tax deducted at source (TDS). Despite the name, it has nothing to do with children or minors.

The certificate becomes relevant in a specific situation involving Form No. 128, used to seek lower or nil TDS under Section 395(1) of the new Act. The form also covers applications for lower collection of tax collected at source (TCS) under Section 395(3).

The Income-tax Act, 2025 and the Income-tax Rules, 2026 came into force from April 1, 2026. Form No. 128 replaces the earlier Form No. 13.

When Does A Child Certificate Come Into Play?

Normally, a taxpayer applying for a lower or nil TDS certificate provides details of the persons who will make payments and deduct tax. But a taxpayer dealing with a large number of deductors may not know all their details when filing the application, according to a recent report by Mint.

If the number of persons responsible for deducting tax is likely to exceed 100 and their details are unavailable at the time, the taxpayer can use Annexure-II of Form No. 128.

The main lower or nil deduction certificate is then issued in the applicant’s name. Once details of individual deductors become available, the taxpayer has to generate separate child certificates for them.

Each child certificate is linked to the main certificate issued by the Assessing Officer and is generated for a specific deductor. Multiple child certificates can be issued, subject to the limit specified in the main certificate.

What Does The Deductor Have To Do?

The payer or deductor uses the child certificate to apply the lower or nil TDS rate approved for the taxpayer. The deductor must also quote the child certificate details in the TDS statement while reporting the transaction.

For the taxpayer, this allows the lower or nil deduction approval to be used for specific payers even when their details were not available initially. For the deductor, it provides the basis for applying the approved TDS rate.

How To Generate A Child Certificate

The facility is available through the TDS Reconciliation Analysis and Correction Enabling System (TRACES) portal. After logging in, the applicant has to go to the Dashboard, select Services and choose the option to generate and download a child certificate issued under Section 395(1) for Form No. 128 Annexure-II.

The taxpayer then enters the required details of the specific deductor, generates the certificate and provides it to that payer.

Form No. 128 is optional. It is required only when a taxpayer seeks lower or nil TDS or lower TCS. The form has to be filed electronically, and a PAN is necessary for filing it.

FAQs

1. What is a child certificate under the Income-tax Act, 2025?
It is a deductor-specific certificate linked to the main lower or nil TDS certificate issued to a taxpayer under Section 395(1).

2. When is a child certificate required?
It becomes relevant when a taxpayer expects more than 100 deductors and their details were not available while filing Form No. 128.

3. How can a taxpayer generate a child certificate?
The taxpayer can generate and download it through the TRACES portal by providing the details of the specific deductor.