The Income Tax Department is preparing rules to implement a 2026‑27 Budget provision that lets taxpayers apply electronically for lower or nil TDS certificates. Minister of State for Finance Pankaj Chaudhary confirmed that Section 395(1) of the Income‑Tax Act 2025 allows such certificates and that the Finance Act 2026 will enable electronic filing. The enabling rule is still being drafted and will be notified later.
A lower or nil TDS certificate is useful when a taxpayer’s real tax liability is less than the amount deducted at source. By applying online, the taxpayer can avoid over‑deduction and later claim a refund. The new process will use information already stored on the income‑tax portal, such as filed returns, AIS, TIS and Form 26AS.
If all prescribed conditions are met, the certificate will be issued electronically. Applications that do not satisfy the conditions will be rejected. This change removes the need for physical documents, reduces visits to tax offices and makes the process faster, paperless and more transparent.
Chaudhary also shared performance data from the department. In the 2025‑26 fiscal year, 2.24 lakh appeals were disposed of, up from 1.11 lakh in 2023‑24. Faceless assessments in FY26 reached 2.13 lakh, lower than 2.73 lakh in FY24. These figures were provided in response to a question about recent disposal rates.