Summary of this article
Taxpayers may apply online for lower or nil TDS certificates.
Applications will use ITRs, AIS, TIS and Form 26AS data.
Income Tax Department disposed 2.24 lakh appeals in FY26.
The Income Tax Department is preparing rules to implement a provision in the 2026-27 Budget that will allow taxpayers to apply electronically for certificates for lower or nil deduction of tax deducted at source (TDS).
Minister of State for Finance Pankaj Chaudhary informed Lok Sabha on August 10, 2026 that the rules are currently under preparation and will be notified in due course. The provision is part of Section 395(1) of the Income-tax Act, 2025, which provides for the issue of certificates allowing tax to be deducted at nil or lower rates. The Finance Act, 2026, introduced an electronic application facility for taxpayers seeking such certificates.
Under the new system, a taxpayer will be able to submit the application online instead of following a physical process. The application will be examined based on information available with the Income Tax Department and the certificate will be issued or rejected depending on whether the prescribed conditions are met.
What The New Process Will Change
A lower or nil TDS certificate is generally relevant when a taxpayer expects their final income tax liability to be lower than the tax that would otherwise be deducted from their income.
Tax is deducted at source during the year by the person or entity making a payment. If the TDS is higher than the taxpayer’ eventual liability, the excess amount can generally be claimed back through an income tax refund (ITR).
The proposed electronic process is intended to allow eligible taxpayers to seek a lower deduction in advance, reducing the amount of excess tax collected during the year.
The application will be processed using information already available on the income tax portal. This includes previously filed ITRs, the annual information statement (AIS), taxpayer information summary (TIS) and Form 26AS.
Where the information available with the department supports the application and the prescribed conditions are fulfilled, the certificate will be issued electronically. Applications where the available information does not match the claims may be rejected.
Faceless Assessments And Appeals
Chaudhary also provided data on faceless assessments and the disposal of appeals by the Income Tax Department while responding to a question in Lok Sabha.
The department disposed of 224,000 appeals during 2025-26, compared with 111,000 appeals in 2023-24.
In the case of faceless assessments, 213,000 assessments were completed during 2025-26. This was lower than the 273,000 faceless assessments completed in 2023-24.
