Income Tax Form 128: Application for Lower or Nil TDS/TCS Certificate

Form No. 128, introduced under Section 395(1) and 395(3) of the Income-tax Act, 2025, replaces earlier Form 13 and enables taxpayers to apply for a certificate for lower or nil deduction or collection of tax (TDS/TCS). It is applicable to both residents and non-residents seeking reduced tax rates on specified income such as interest, commission, rent, or professional fees. Filing is optional but beneficial to avoid excess tax deduction and improve cash flow. The form must be submitted electronically through the TRACES portal before the relevant transaction, as applications cannot be processed afterward. There is no limit on the number of applications in a year, and supporting documents like income computation and prior tax details are required. The certificate, once issued, authorizes payers to deduct or collect tax at specified rates. The form also introduces features like applicant categorization, annexures, and child certificates for multiple deductors, enhancing compliance and usability.

Income Tax Department
Ministry of Finance, Government of India

FAQs on Income Tax Form 128 (Earlier Form No. 13): Application for Lower/Nil TDS & TCS Certificate under Section 395(1) & 395(3)

Application for issuance of certificate for lower/nil deduction of income-tax and lower collection of income-tax under section 395(1) and 395(3) of the Income-tax Act, 2025

Q.1 What is Form No. 128?

Ans: Form No. 128 is used by a taxpayer to apply for a certificate authorizing the payer to deduct/collect tax at a lower or nil rate under section 395(1)/395(3) of the Income-tax Act, 2025.

Q.2 Who is required to file Form No. 128?

Ans: Any person (resident or non-resident) seeking certificate for no deduction of tax, or deduction or collection of tax at a lower rate under section 395(1) (for TDS) or section 395(3) (for TCS) of the Income-tax Act, 2025 is required to file Form No. 128.

Q.3 Is filing of Form No. 128 mandatory?

Ans: Form No. 128 is optional and is to be filed only if a person wishes to obtain a certificate for lower deduction/collection or nil deduction of tax. The application must be furnished electronically after logging into the TRACES portal of Income-tax Department (URL: www.tdscpc.gov.in).

Q.4 What is the time limit for filing Form No. 128?

Ans: Since the Lower/Nil Deduction Certificate should be provided to the payer before the deduction or collection of tax on the income or transaction as the case may be, therefore, the application for obtaining the certificate in Form No. 128 should be filed with Income-tax Department as early as possible. The applicant must apply for certificate well before the date of transaction. Such application cannot be processed once the transaction involving TDS/TCS is completed.

Q.5 How many times can Form No. 128 be filed in a Tax Year?

Ans: There is no statutory limit on the number of times Form No. 128 can be filed in a Tax Year. A taxpayer may file more than one application in Form No. 128, subject to any changes in the estimated transaction/income during the course of the Tax Year.

Q.6 What documents are required to be attached while filing an application in Form No. 128?

Ans: The following documents are required to be attached

• Computation of estimated total income and tax liability for the Tax Year.
• If ITR was not filed for any of preceeding four tax years, then computation of income for such Tax Year.

A note for income claimed to be exempt and not included in the total income, if applicable.

Q.7 Having filed an application in Form No. 128, can the same be withdrawn?

Ans: Yes, an application in Form No. 128 can be withdrawn till the time the same has not been processed.

Q.8 Can Form No. 128 be filed offline?

Ans: No. Form No. 128 has to be mandatorily furnished electronically through the TRACES portal of Income-tax Department.

Q.9 What is the process flow of filing Form No. 128?

Ans: The process flow includes following steps –

a) Login to the TRACES Portal

b) Navigate to “TRACES login – Dashboard – e-file and view – File Forms – Form No. 128”

c) Fill the Online Form

d) Upload Supporting Documents

e) E-Verify and Submit the Form

Q.10 What if the applicant does not have a PAN?

Form No. 128 (Earlier Form No. 13)

Ans: Form No. 128 cannot be submitted without a PAN.

Q.11 Where can the details of the certificate issued be viewed?

Ans: Once processed, the digitally issued certificate can be accessed/downloaded through the TRACES portal, using the following options:

TRACES login – Dashboard – Downloads – Lower/Nil Deduction/Collection Certificates

or

“TRACES login – Dashboard – e-file and View – View Filed Forms and Statements

Q.12 Can Form No. 128 be filed if the details of the payers are not available?

Ans: Yes. If the number of persons responsible for deducting tax is likely to exceed 100 and details of such persons are not available with the applicant at the time of making application, then the applicant should fill the Annexure-II of Form No. 128.

Q.13 How the certificates will be issued in case Annexure-II of Form No. 128 was filed?

Ans: In case application is made using Annexure-II of Form No. 128, the certificate will be issued in the name of the applicant. As and when the details of the payers are available with the applicant, he is required to generate and provide “Child Certificates” to each of the person responsible for deducting tax.

Q.14 What is a Child Certificate?

Ans: It is issued by the taxpayer based on the certificate issued by the Assessing Officer, by entering the details of the specific deductors who are required to deduct tax on transaction or income to be paid or credited to the taxpayer. Multiple child certificates can be issued subject to the limit mentioned in the main certificate issued by the AO. The deductors should then deduct the tax as per the child certificate provided by the taxpayer and quote the details of the same in the TDS statement while reporting the transaction.

Q.15 How to generate child certificates?

Ans: The applicant is required to generate child certificates in case of application filed in Annexure-II of Form No. 128 using the following path:

TRACES login – Dashboard – Services – Generate and Download Child Certificate issued u/s 395(1) (Form No. 128 Annexure II)

Q.16 How will applicant know whether the Form No. 128 submitted by him has been accepted by the Income-tax Department?

Ans: After filing Form No. 128 on the TRACES portal of Income-tax Department, the taxpayer receives an Acknowledgment Receipt Number (ARN) on successful submission of the Form.

Guidance Note on Income Tax Form 128 (Earlier Form No. 13): Application for Lower/Nil TDS & TCS Certificate under Section 395(1) & 395(3)

Form No. 128: Application for issuance of certificate for lower/nil deduction of Income-tax and lower collection of Income-tax under section 395(1) and 395(3) of the Income-tax Act, 2025

Purpose:

Form No. 128 is used by a taxpayer to apply for a certificate authorizing the payer to deduct tax at a lower or nil rate/collect tax at a lower rate under section 395(1)/395(3) of the Income-tax Act, 2025. The application must be furnished electronically to the Director General of Income-tax (Systems) or any person authorized on their behalf.

Who Should File:

Any person (resident or non-resident) seeking certificate for no deduction of tax, or deduction or collection of tax at a lower rate under section 395(1) (for TDS) or section 395(3) (for TCS) of the Income-tax Act, 2025, in respect of income that is subject to tax deduction at source (TDS) such as interest, commission, professional fees, contract payments, rent, or other specified income may file application in Form No. 128.

Frequency & Due Dates:

Form No. 128 may be filed any time during the Tax Year for which the certificate is sought. Once approved, the certificate is generally valid for the specified period mentioned in the certificate or until withdrawn or modified by the Assessing Officer.

Structure of Form No. 128:

1. Part A: Details of Applicant – Name, Address, Status, PAN, Residential Status and Contact Details.

2. Part B:

> Application filed by – Registered non-profit organisation / Specified Entity referred to in Section 263(9)(c) / Person carrying on business or profession / Person other than the above.

> Details of Request

3. Part C:

> Details of existing tax liabilities

> Particulars of income and other relevant details

4. Part D: Declaration for Registered non-profit organisation or Specified Entity referred to in Rule 213

5. Part E: Declaration for the person other than person mentioned in Part D

6. Part F: Verification

7. Annexure-I: Applicable for TDS

8. Annexure-II: Applicable for TDS where the number of persons responsible for deducting tax is likely to exceed 100 and details of such persons are not available with the applicant at the time of making application.

9. Annexure-III: Applicable for TCS

Documents/details required to file the Form No. 128:

1. PAN of the applicant.

2. Details of the payer(s) including TAN for Annexure-I & III.

3. Estimated income and tax computation for the period.

4. Last 4 years’ ITRs, Audit Reports, financial statements, or other supporting financial data (if required).

5. Details of advance tax paid, TDS/TCS credits available.

Filing Count:

On average, about 1.2 lakh original applications were filed annually over the last five years. Process flow of filing Form No. 128:

The process flow includes following steps:

1. Login to the TRACES Portal

2. Navigate to “TRACES login → Dashboard -* e-file and view -* File Forms → Form No. 128”

3. Fill the Online Form

4. Upload Supporting Documents

5. E-Verify and Submit the Form

6. The application is processed by the Assessing Officer/automated system.

7. Upon approval, the lower deduction/collection or nil deduction certificate becomes available for download and sharing with the payer.

Outcome of the Processed Form No. 128:

For the Applicant (Deductee/Collectee)

> Upon processing of Form No. 128, the taxpayer may receive a certificate for deduction/collection of tax at a lower rate or deduction of tax at nil rate under section 395(1)/395(3).

> Once issued, the certificate becomes available electronically and can be shared with the payer(s) to ensure tax is deducted/collected at the approved rate.

> The certificate helps the taxpayer avoid excess deduction/collection of tax, thereby improving cash flow and reducing the need to claim refunds.

> The details of the certificate are also made available to the payer (deductor/collector) through the system, enabling them to apply the correct TDS/TCS rate while making/receiving payments.

For the Payer (Deductor/Collector)

> Once Form No. 128 is processed and a lower deduction/collection or nil deduction certificate is issued, the deductor/collector can verify the certificate electronically (through TRACES).

> The deductor/collector becomes authorised to deduct/collect tax at the lower rate or deduct tax at nil rate specified in the certificate for payments made to the applicant.

> The deductor/collector must apply the approved rate for all eligible payments covered by the certificate during its validity period.

> The details of the certificate help the deductor/collector correctly report TDS/TCS in their periodic TDS/TCS statements, ensuring seamless matching and credit for the taxpayer.

> If the certificate is modified, withdrawn, or expires, the deductor/collector is required to update the TDS/TCS rate accordingly from that point onward.

Brief Note on Qualitative Changes made:

1. Categorisation of Applicants

The Form has been restructured to classify applicants into four specific categories to streamline the filing process and capture relevant information more accurately. The categories are:

• Registered Non-Profit Organization
• Specified Entity referred to in section 263(9)(c)
• Person carrying on business or profession
• Others

2. Annexure and Declarations Based on Applicant Category

Depending on the category selected, the relevant Annexure and declaration sections will be displayed and will become applicable. This ensures that each applicant is required to provide only the information and declarations pertinent to their category, enhancing clarity and reducing unnecessary compliance burden.

3. Child Certificate

Where the number of persons responsible for deducting the tax is likely to exceed 100 and details of such persons are not available with the applicant at the time of making application, the certificate may be issued in the name of the applicant authorising him –

(a) to receive specified payments at appropriate rate of deduction; and

(b) to generate appropriate certificate and provide to the person responsible for deducting tax.

4. The revised Form No. 128 will be a smart one to enhance user experience and providing ease of filing through

(a) auto-population/pre-filling of relevant details using information available from the Taxpayer’s TRACES profile.

(b) real time validations & error handling

(c) drop downs & date pickers

(d) integration with APIs & Databases

(e) Check box based smart verification

(f) Standardization of name & address fields etc.

Common Changes made across Forms:

1. To make Forms system-friendly and enable e-filing and uploading, certain anomalies found due to grouping of Name, Designation, Address and PAN have been separated into different boxes.

2. Assessment / Financial / Previous year or years have been replaced with Tax year or years, wherever appearing in the Form/Annexure.

3. Changes in Sections, Clauses and Schedules have been aligned as per the Income-tax Act, 2025.

4. Currency symbol “Rs.” has been replaced with “₹”.